What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-21 compared with 2024-02-21 · 593 added, 632 removed, 1613 unchanged (43% of the section changed)

11 unchanged sentences

Notes to Consolidated Financial Statements

Index to Financial Statements

Report of Management

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The company’s financial statements have been audited by Ernst & Young LLP, an independent registered public accounting firm appointed by the Audit and Finance Committee of the Board of Directors.

Management has made available to Ernst & Young LLP all of the company’s financial records and related data, as well as the minutes of stockholders’ and directors’ meetings.

Management has made available to Ernst & Young LLP all of the company’s financial records and related data, as well as the minutes of shareholders’ and directors’ meetings.

Assessment of Internal Control Over Financial Reporting

9 unchanged sentences

Lashier Kevin J.

President and Chief Executive Officer Executive Vice President and

Chairman and Chief Executive Officer Executive Vice President and

Chief Financial Officer

February 21, 2025

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Phillips 66

To the Board of Directors and Shareholders of Phillips 66

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Phillips 66 (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audits and, for 2023 and 2022, the report of other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

In our opinion, based on our audits and, for 2023 and 2022, the report of Deloitte & Touche LLP, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

We did not audit the 2023 and 2022 financial statements of DCP Midstream, LP (DCP LP), a consolidated subsidiary, which reflect total assets constituting approximately 14% and 18% at December 31, 2023 and 2022 respectively, and total revenues constituting approximately 4% in 2023 and 3% in 2022 for the years then ended.

Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for DCP LP for 2023 and 2022, is based solely on the report of the other auditors.

We did not audit the 2023 and 2022 financial statements of DCP Midstream, LP (DCP LP), a consolidated subsidiary, whose financial statements reflect total assets constituting 14% of the Company’s total assets as of December 31, 2023 and total revenues constituting 4% and 3% of the Company’s revenues and other income for the years ended December 31, 2023 and 2022, respectively.

Those statements were audited by Deloitte & Touche LLP, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for DCP LP for 2023 and 2022, is based solely on the report of Deloitte & Touche LLP.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2025 expressed an unqualified opinion thereon.

9 unchanged sentences

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits and the report of other auditors provide a reasonable basis for our opinion.

Index to Financial Statements

We believe that our audits and the report of Deloitte & Touche LLP provide a reasonable basis for our opinion.

Critical Audit Matter

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Assessment of Certain Equity Method Investments

Description of the Matter

As discussed in Note 1 to the consolidated financial statements, the Company assesses investments in nonconsolidated entities accounted for under the equity method for impairment when changes in the facts and circumstances indicate a loss in value has occurred.

As discussed in Note 8 to the consolidated financial statements, the Company owns a 50% interest in WRB Refining LP (WRB), a joint venture that owns the Wood River and Borger refineries.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment assessment of WRB Refining LP, an equity method investment

Description of the Matter As discussed in Note 1 to the financial statements, the Company assesses investments in unconsolidated affiliates accounted for using the equity method for impairment when events or changes in circumstances indicate a loss in value that is other than temporary may have occurred.

As discussed in Note 9 to the financial statements, the Company owns a 50% interest in WRB Refining LP (WRB), a joint venture that owns the Wood River and Borger refineries.

The carrying value of the Company’s investment in WRB was $2.3 billion as of December 31, 2024.

WRB’s earnings are subject to variability as they are dependent on market conditions, as well as the utilization of its refineries.

WRB’s earnings are subject to variability as they depend on, among other things, market conditions, the utilization of its refineries, cost levels and other factors relevant to its operations.

Accordingly, significant judgment is required in determining whether events or changes in circumstances indicate a loss in value may have occurred that is indicative of a possible impairment.

We determined that the identification and evaluation of events or changes in circumstances indicating that the carrying value of the investment in WRB may not be recoverable is a critical audit matter because of the judgement and assumptions management uses to perform its identification and evaluation of such factors.

We determined the Company’s process for evaluating whether an other than temporary impairment of its investment in WRB has occurred is a critical audit matter because of the judgment and assumptions management uses to perform its identification and evaluation of such factors.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for identifying and evaluating events or changes in circumstances that would indicate that the carrying value of the investment in WRB may not be recoverable and performed a walkthrough of the Company’s process and controls.

Our evaluation of the Company’s analysis included an assessment of whether events or changes in circumstances indicating that the carrying value of the investment in WRB may not be recoverable were appropriately identified and evaluated by the Company.

This included, but was not limited to, an evaluation of the investee’s earnings history and an evaluation of the sustainability of the investee’s earnings under current and expected market conditions.

We exercised professional judgment based on our knowledge of the industry and the investee’s business to assess the appropriateness of management’s evaluation and conclusions.

For example, we performed inquiries of management, considered WRB’s historical operating results, reviewed the projected investment recovery period, and assessed current and expected market conditions affecting WRB’s results.

We performed an independent assessment using both internally and externally available information, such as utilization and margins for WRB’s and other regional refineries, as well as forecasted prices, market crack spreads and demand.

We also considered other information, such as the Company’s internal valuations, to identify evidence contrary to management’s conclusion.

Additionally, we evaluated management’s process to accurately forecast future operating income by comparing actual results to budgeted results.

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls for the assessment of potential other than temporary impairments in WRB, which included identifying and evaluating events or changes in circumstances that could indicate a potential other than temporary impairment.

We exercised professional judgment based on our knowledge of the industry and WRB’s business to assess the appropriateness of management’s conclusion that no such events existed or changes in circumstances had occurred as of December 31, 2024.

In our evaluation, among other things, we performed inquiries of management and evaluated WRB’s prior and current operating earnings to assess its ability to sustain an earnings capacity that justifies the Company’s recorded investment in WRB and to assess the Company’s ability to recover its investment in WRB.

In addition, we evaluated potential contrary evidence to management’s conclusion, considering both internally and externally available information, such as demand for WRB’s products, gross margins, costs, refinery utilization, and other operating information, as well as comparable market multiples.

/s/ Ernst & Young LLP

2 unchanged sentences

February 21, 2025

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Phillips 66

To the Board of Directors and Shareholders of Phillips 66

Opinion on Internal Control over Financial Reporting

1 unchanged sentence

In our opinion, Phillips 66 (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We did not examine the effectiveness of internal control over financial reporting of DCP Midstream, LP whose financial statements reflect total assets and sales constituting 14% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

The effectiveness of DCP Midstream, LP’s internal control over financial reporting was audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the effectiveness of DCP Midstream, LP’s internal control over financial reporting, is based solely on the report of the other auditors.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 21, 2024, expressed an unqualified opinion thereon, based on our audit and the report of the other auditors.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes, and our report dated February 21, 2025 expressed an unqualified opinion thereon, based on our audit and the report of Deloitte & Touche LLP.

Basis for Opinion

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We believe that our audit provides a reasonable basis for our opinion.

Index to Financial Statements

Definition and Limitations of Internal Control Over Financial Reporting

8 unchanged sentences

February 21, 2025

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

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Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Gulf Coast Express Pipeline, LLC is based solely on the report of the other auditors.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) and in accordance with auditing standards generally accepted in the United States of America, the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2024, expressed an unqualified opinion on the Partnership’s internal control over financial reporting.

Basis for Opinion

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We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

Index to Financial Statements

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to those charged with governance and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Property, Plant and Equipment, Net - Determination of Impairment Indicators and Recoverability Analysis for Asset Grouping in the South Region – Refer to Notes 2, 9 and 12 to the financial statements

Critical Audit Matter Description

The Partnership evaluates on a quarterly basis whether the carrying value of long-lived assets should be impaired when circumstances indicate the carrying value of such long-lived assets may not be recoverable.

Management considers various factors when determining if long-lived assets should be evaluated for impairment including a significant adverse change in the legal or business climate, a current period operating or cash flow loss combined with a history of losses, an accumulation of costs significantly in excess of the amount originally expected, a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in the market value of an asset, or a current expectation that the asset will be sold or otherwise disposed of before the end of its useful life.

The Partnership’s determination of whether impairment indicators exist for long lived assets requires management to apply significant judgments and assumptions.

When events or circumstances exist that indicate the carrying value of long-lived assets may not be recoverable, the Partnership evaluates its long-lived assets for impairment by comparing the carrying amount of the applicable asset group to the sum of the undiscounted cash flows expected to result from the use of the asset (“recoverability analysis”) using the income approach and selecting a discount rate reflective of the risk inherent in future cash flows, and applying that discount rate to the cash flow projections.

If management determines the carrying value is not recoverable, the impairment loss is measured as the excess of the asset’s carrying value over its fair value.

This analysis resulted in management determining that an impairment triggering event had occurred at a certain asset group in the South region of the Gathering and Processing segment.

The triggering event is a reflection of the diminished probability of new well connects and margin degradation, commodity prices in the recently prepared budget forecasts, and a negative outlook for long-term production volume forecasts.

Management prepared a recoverability analysis and recognized a $209 million impairment loss for the year ended December 31, 2023.

We considered the identification of impairment indicators for property, plant and equipment and the associated recoverability analysis as a critical audit matter because of the significant assumptions that management makes when determining whether events or changes in circumstances have occurred or could occur indicating that the carrying amounts of property, plant and equipment may not be recoverable as well as the significant judgements and assumptions made in the undiscounted cash flow analysis used to evaluate recoverability.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate, the terminal value multiple, forecasted future gathering and processing volumes and future commodity pricing.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the identification of impairment indicators for long-lived assets included the following, among others:

• We tested the effectiveness of internal controls over financial reporting related to management’s identification of possible impairment indicators for long-lived assets that may indicate the carrying amount of long-lived assets may not be recoverable.

• We tested the effectiveness of controls over estimates of future volumes of raw natural gas, or other applicable throughput.

Index to Financial Statements

• We evaluated management’s analysis of impairment indicators by:

– Considering industry and analysts reports and the impact of macroeconomic factors, such as adverse changes in the regulatory environment, legislation, significant weather events or other factors that may represent impairment indicators not previously contemplated in management's analysis

– Evaluating management’s forecasts by comparing such forecasts to recent results of operations

– Inquiry of management over whether long-lived assets may be sold or otherwise disposed of significantly before the end of the assets' previously estimated useful life

– Inspecting minutes of the board of directors and committees of executive management to understand if there were factors that would represent potential impairment indicators for long-lived assets

Our further audit procedures on the recoverability analysis included evaluating Management’s significant inputs, including forecasted gathering and processing volumes, future commodity prices, the terminal value multiple, and the selection of the discount rate applied to estimated future cash flows included in Management’s cash flow model, included the following, among others:

• We tested the effectiveness of internal controls over financial reporting related to management’s preparation and review of significant underlying assumptions used in the undiscounted cash flow model

• For asset groups for which a recoverability analysis was performed, we evaluated management’s estimates for significant inputs by:

– Evaluating the reasonableness of volumetric assumptions by comparing forecasts to permits and rig count data including researching industry trends

– Performing a sensitivity analysis to evaluate the change in undiscounted cash flows that would result from changes in significant underlying assumptions

– Performing a lookback analysis by comparing historical results to management’s future assumptions to assess the reasonableness of estimates

– Evaluating the reasonableness of management’s future commodity pricing forecasts by comparing to independent analysts’ estimates

• With the assistance of our Internal fair value specialists, we evaluated the reasonableness of the discount rate and terminal value multiple by:

– Evaluating the appropriateness of the mathematical model used to develop the discount rate

– Evaluating the guideline public companies selected by management and used in the selection of the discount rate considering the comparability of operations to those of the Partnership

– Developing a range of independent estimates of the discount rate by independently obtaining information to estimate components of the discount rate, including the cost of debt capital, the cost of equity capital, and debt-to-equity ratio

– Evaluating the terminal value multiple in comparison to recent valuation metrics for companies of similar operations

/s/ Deloitte & Touche LLP

1 unchanged sentence

February 21, 2024

We have served as the Partnership’s auditor since 2004.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm

To the Board of Directors of DCP Midstream GP, LLC and the Unitholders of DCP Midstream, LP

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of DCP Midstream, LP and subsidiaries (the "Partnership") as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) and in accordance with auditing standards generally accepted in the United States of America, the consolidated financial statements as of and for the year ended December 31, 2023, of the Partnership (not presented herein) and our report dated February 21, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Partnership's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting (not presented herein).

Our responsibility is to express an opinion on the Partnership's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Denver, Colorado

February 21, 2024

Index to Financial Statements

We began serving as the Partnership’s auditor in 2004.

In 2024 we became the predecessor auditor.

Consolidated Statement of Income Phillips 66

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See Notes to Consolidated Financial Statements.

Index to Financial Statements

Consolidated Statement of Comprehensive Income Phillips 66

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See Notes to Consolidated Financial Statements.

Index to Financial Statements

Consolidated Balance Sheet Phillips 66

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See Notes to Consolidated Financial Statements.

Index to Financial Statements

Consolidated Statement of Cash Flows Phillips 66

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Undistributed equity earnings ( 411 ) ( 822 ) ( 1,308 )

Loss on early redemption of debt 53 — —

Loss (gain) on early redemption of debt ( 3 ) 53 —

Net gain on dispositions ( 321 ) ( 115 ) ( 7 )

Gain related to merger of businesses — — ( 3,013 )

Unrealized investment (gain) loss 38 433 ( 365 )

Unrealized investment loss — 38 433

Other 758 ( 419 ) 217

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Capital expenditures and investments ( 1,859 ) ( 2,155 ) ( 1,888 )

Acquisitions, net of cash acquired ( 625 ) ( 263 ) ( 306 )

Purchases of government obligations ( 1,100 ) — —

Return of investments in equity affiliates 141 201 125

19 unchanged sentences

See Notes to Consolidated Financial Statements.

Index to Financial Statements

Consolidated Statement of Changes in Equity Phillips 66

7 unchanged sentences

Net income — — — 11,024 — 367 11,391

Other comprehensive income — — — — 344 — 344

Dividends paid on common stock — — — ( 1,585 ) — — ( 1,585 )

Distributions to noncontrolling interests — — — — — ( 324 ) ( 324 )

Repurchase of noncontrolling interests — — — ( 2 ) — ( 21 ) ( 23 )

Benefit plan activity 1 121 — ( 14 ) — — 108

December 31, 2021 7 20,504 ( 17,116 ) 16,216 ( 445 ) 2,471 21,637

Net income — — — 11,024 — 367 11,391

Other comprehensive loss — — — — ( 15 ) — ( 15 )

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December 31, 2023 7 19,650 ( 19,342 ) 30,550 ( 282 ) 1,067 31,650

Index to Financial Statements

Common Stock Issued Treasury Stock

Net income — — — 2,117 — 58 2,175

Other comprehensive loss — — — — ( 125 ) — ( 125 )

Dividends paid on common stock — — — ( 1,882 ) — — ( 1,882 )

Repurchase of common stock — — ( 3,409 ) — — — ( 3,409 )

Distributions to noncontrolling interests — — — — — ( 70 ) ( 70 )

Benefit plan activity — 138 — ( 14 ) — — 124

December 31, 2024 $ 7 19,788 ( 22,751 ) 30,771 ( 407 ) 1,055 28,463

Shares issued—share-based compensation 1,383,095 —

Common Stock Issued Treasury Stock

December 31, 2021 650,026,318 211,771,827

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interest in Phillips 66 Partners LP — ( 41,825,236 )

— ( 41,825,236 )

December 31, 2022 652,373,645 186,529,667

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December 31, 2023 654,842,101 224,377,439

Repurchase of common stock — 24,217,484

Shares issued—share-based compensation 2,145,760 —

December 31, 2024 656,987,861 248,594,923

Years Ended December 31 Dividends Paid Per

1 unchanged sentence

See Notes to Consolidated Financial Statements.

Index to Financial Statements

Notes to Consolidated Financial Statements Phillips 66

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Undivided interests in pipelines, natural gas plants and terminals are consolidated on a proportionate basis.

See Note 29—DCP Midstream Class A Segment for further discussion about a significant VIE that we began consolidating in August 2022, and Note 30—Phillips 66 Partners LP, for further discussion regarding our merger with Phillips 66 Partners LP (Phillips 66 Partners).

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further discussion about a significant VIE that we began consolidating in August 2022, and Note 30—Phillips 66 Partners LP, for further discussion regarding our merger with Phillips 66 Partners LP (Phillips 66 Partners), a wholly owned subsidiary of Phillips 66.

The equity method is used to account for investments in affiliates in which we have the ability to exert significant influence over the affiliates’ operating and financial policies, including VIEs, of which we are not the primary beneficiary.

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See Note 9—Investments, Loans and Long-Term Receivables, for further discussion on our significant unconsolidated VIEs.

Recast Financial Information

Certain prior period financial information has been recast and reclassified to reflect the current year’s presentation.

See Note 29—Segment Disclosures and Related Information and Note 26—Cash Flow Information, for further information.

Use of Estimates

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Level 3 inputs are unobservable inputs for the asset or liability that are used to measure fair value to the extent that relevant observable inputs are not available, and that reflect the assumptions we believe market participants would use when pricing an asset or liability for which there is little, if any, market activity at the measurement date.

Index to Financial Statements

Derivative Instruments

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Loans and long-term receivables are evaluated for impairment based on an expected credit loss assessment.

Impairment of Investments in Nonconsolidated Entities

Investments in nonconsolidated entities accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred.

Impairment of Investments in Unconsolidated Affiliates

Investments in unconsolidated affiliates accounted for under the equity method are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred.

When indicators exist, the fair value is estimated and compared to the investment carrying value.

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A portion of interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer.

Capitalized interest is added to the cost of the related asset, and is amortized over the useful life of the related asset.

Index to Financial Statements

Capitalized interest is added to the cost of the related asset, and is depreciated over the useful life of the related asset.

Impairment of Properties, Plants and Equipment

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A goodwill impairment cannot exceed the total amount of goodwill allocated to that reporting unit.

For purposes of assessing goodwill for impairment, we have two reporting units with goodwill balances at our 2023 testing date:

Transportation and Marketing and Specialties (M&S).

For purposes of assessing goodwill for impairment, we have three reporting units with goodwill balances at our 2024 testing date:

Marketing and Specialties (M&S), Transportation and Natural Gas Liquids (NGL).

Intangible Assets Other Than Goodwill

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If quoted market prices are not available, the fair value of intangible assets is determined based upon the present values of expected future cash flows using discount rates and other assumptions believed to be consistent with those used by principal market participants, or upon estimated replacement cost, if expected future cash flows from the intangible asset are not determinable.

Index to Financial Statements

Asset Retirement Obligations

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We will recognize liabilities for these obligations in the period when sufficient information becomes available to estimate a date or range of potential retirement dates.

See Note 4—Restructuring, for additional information regarding the change in asset retirement obligation related to our intention to cease operations at our Los Angeles Refinery.

Environmental Costs

11 unchanged sentences

Treasury Stock

We record treasury stock purchases at cost, which includes related transaction costs.

We record treasury stock purchases at cost, which includes related transaction costs and excise taxes.

Amounts are recorded as reductions of stockholders’ equity on the consolidated balance sheet.

Common stock reissued from treasury stock is valued based on the average cost of historical repurchases.

Index to Financial Statements

Revenue Recognition

Our revenues are primarily associated with sales of refined petroleum products, crude oil, natural gas liquids (NGL) and natural gas.

Our revenues are primarily associated with sales of refined petroleum products and renewable fuels, crude oil, NGL and natural gas.

Each gallon, or other unit of measure of product, is separately identifiable and represents a distinct performance obligation to which a transaction price is allocated.

7 unchanged sentences

Taxes Collected from Customers and Remitted to Governmental Authorities

Excise taxes on sales of refined petroleum products charged to our customers are presented net of taxes on sales of refined petroleum products payable to governmental authorities in the “Taxes other than income taxes” line item on our consolidated statement of income.

Excise taxes on sales of refined petroleum products and renewable fuels charged to our customers are presented net of taxes on sales of refined petroleum products and renewable fuels payable to governmental authorities in the “Taxes other than income taxes” line item on our consolidated statement of income.

Other sales and value-added taxes are recorded net in the “Taxes other than income taxes” line item on our consolidated statement of income.

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(1) the service period (i.e., the stated period of time required to earn the award);

or (2) the period beginning at the start of the service period and ending when an employee first becomes eligible for retirement, but not less than ten months for shared-based payment awards granted in 2023 and not less than six months for share-based payment awards granted prior to 2023 as those are the minimum periods of time required for awards not to be subject to forfeiture.

or (2) the period beginning at the start of the service period and ending when an employee first becomes eligible for retirement, but not less than ten months for shared-based payment awards granted beginning in 2023 and not less than six months for share-based payment awards granted prior to 2023 as those are the minimum periods of time required for awards not to be subject to forfeiture.

Our equity-classified programs generally provide accelerated vesting (i.e., a waiver of the remaining period of service required to earn an award) for awards held by employees at the time they become eligible for retirement (at age 55 with 5 years of service).

We have elected to recognize expense on a straight-line basis over the service period for the entire award, irrespective of whether the award was granted with ratable or cliff vesting, and have elected to recognize forfeitures of awards when they occur.

Index to Financial Statements

Income taxes are accounted for under the asset and liability method.

3 unchanged sentences

Income tax effects are released from accumulated other comprehensive loss to retained earnings, when applicable, on an individual item basis as those items are reclassified into income.

Interest related to unrecognized income tax benefits is reflected in the “Interest and debt expense” line item, and penalties in the “Operating expenses” or “Selling, general and administrative expenses” line items on our consolidated statement of income.

Index to Financial Statements

Interest related to unrecognized income tax benefits is reflected in the “Interest and debt expense” line item, and penalties are reported in the “Operating expenses” or “Selling, general and administrative expenses” line items on our consolidated statement of income.

Note 2— Changes in Accounting Principles

Effective January 1, 2023, we adopted ASU 2022-04, “Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations.” This ASU requires the buyer in a supplier finance program to disclose qualitative and quantitative information about the program.

At the time of adoption, this ASU did not have a material impact on our consolidated financial statements.

Effective January 1, 2022, we early adopted ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” This pronouncement requires application of ASC 606 “Revenue from Contracts with Customers” (“Topic 606”) to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination.

The adoption of this pronouncement did not have a material impact on our consolidated financial statements.

Effective October 1, 2021, we adopted ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform (Topic 848):

Scope.” These pronouncements provide temporary optional expedients and exceptions to the current guidance on contracts, hedge relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform.

Amendments in ASU 2021-01 further clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

These pronouncements were effective upon issuance and applicable to contract modifications through December 31, 2022.

On December 21, 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.” The ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848.

This pronouncement was also effective upon issuance.

The adoption of these pronouncements did not impact our consolidated financial statements.

Index to Financial Statements

Effective December 31, 2024, we adopted ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The adoption of this pronouncement did not have an impact on our consolidated financial statements;

however, it resulted in additional disclosures within Note 29—Segment Disclosures and Related Information.

Note 3— DCP Midstream, LLC and DCP Midstream, LP Mergers

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Starting on August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills and reporting the direct and indirect economic interests held by others in these entities as noncontrolling interests on our financial statements.

Index to Financial Statements

We account for our remaining indirect economic interest in Gray Oak Pipeline, now held through DCP Midstream Class B Segment, using the equity method of accounting.

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See Note 5—Business Combinations, for additional information regarding our accounting for this transaction.

See Note 29—DCP Midstream Class A Segment, for additional information regarding our variable interest in DCP Midstream Class A Segment.

DCP Midstream, LP Merger (DCP LP Merger)

On June 15, 2023, we completed the acquisition of all publicly held common units of DCP LP pursuant to the terms of the Agreement and Plan of Merger, dated as of January 5, 2023 (DCP LP Merger Agreement).

On June 15, 2023, we completed the acquisition of all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward, pursuant to the terms of the Agreement and Plan of Merger, dated as of January 5, 2023 (DCP LP Merger Agreement).

The DCP LP Merger Agreement was entered into with DCP LP, its subsidiaries and its general partner entities, pursuant to which one of our wholly owned subsidiaries merged with and into DCP LP, with DCP LP surviving as a Delaware limited partnership.

Under the terms of the DCP LP Merger Agreement, at the effective time of the DCP LP Merger, each publicly held common unit representing a limited partner interest in DCP LP (other than the common units owned by DCP Midstream and its subsidiaries) issued and outstanding as of immediately prior to the effective time was converted into the right to receive $ 41.75 per common unit in cash.

We accounted for the DCP LP Merger as an equity transaction.

We paid $ 3,796 million in cash consideration to common unitholders, funded with a combination of available cash and debt proceeds.

The DCP LP Merger was accounted for as an equity transaction.

The DCP LP Merger increased our aggregate direct and indirect economic interest in DCP LP from 43.3 % to 86.8 % and our aggregate direct and indirect economic interests in DCP Sand Hills and DCP Southern Hills increased from 62.2 % to 91.2 %.

See Note 29—DCP Midstream Class A Segment, for additional information regarding the equity transaction.

DCP Midstream Class A Segment

DCP Midstream Class A Segment is a VIE and we are the primary beneficiary.

DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities.

DCP LP is a master limited partnership whose operations currently include producing and fractionating NGL;

gathering, compressing, treating and processing natural gas;

recovering condensate;

and transporting, trading, marketing and storing natural gas and NGL.

The most significant assets of DCP Midstream Class A Segment that are available to settle only its obligations, along with its most significant liabilities for which its creditors do not have recourse to Phillips 66’s general credit, were:

Millions of Dollars

December 31, 2024 December 31, 2023

Accounts receivable $ 638 601

Net properties, plants and equipment 8,861 9,319

Investments and long-term receivables 1,622 1,901

Accounts payable 909 815

Short-term debt 532 357

Long-term debt 2,913 3,759

Preferred Units

On October 16, 2023, DCP LP redeemed its Series C preferred units at the aggregated liquidation preference of $ 110 million, which approximated the book value of the preferred units.

On June 15, 2023, DCP LP redeemed its Series B preferred units at the aggregated liquidation preference of $ 161 million, which approximated the book value of the preferred units.

In December 2022, DCP LP redeemed its Series A preferred units with an aggregate liquidation preference of $ 500 million, which approximated the book value of the preferred units.

These preferred unit redemptions decreased the “Noncontrolling interests” balance on our consolidated balance sheet from December 31, 2022.

Trading and Reporting Status

In late 2023, DCP LP’s common units, Series B preferred units and Series C preferred units were delisted and deregistered from the New York Stock Exchange.

In addition, DCP LP has suspended its reporting obligations to the Securities and Exchange Commission under Sections 13 and 15(d) of the Exchange Act.

Distributions

For the years ended December 31, 2024, 2023 and 2022, DCP LP made cash distributions of $ 47 million, $ 125 million and $ 51 million, respectively, to common unitholders other than Phillips 66 and its subsidiaries.

Note 4— Restructuring

Los Angeles Refinery

In October 2024, we announced our intention to cease operations at our Los Angeles Refinery in the fourth quarter of 2025, and are evaluating potential future uses of the property.

As a result of this decision, the following impacts were recorded in our Refining segment:

• We assessed the Los Angeles Refinery asset group for impairment and concluded that the carrying value of the asset group was recoverable.

However, the estimated useful lives of the Los Angeles Refinery assets were shortened to reflect the plan to cease the use of the assets in the fourth quarter of 2025.

As of December 31, 2024, the $ 1,248 million carrying value of the net PP&E and intangible assets will be depreciated through December 2025 to the estimated salvage value of $ 241 million.

Total depreciation related to the Los Angeles Refinery assets for the year ended December 31, 2024, was $ 350 million, including $ 253 million of accelerated depreciation.

This accelerated depreciation is included within the “Depreciation and amortization” line item on our consolidated statement of income for the year ended December 31, 2024.

• We increased our asset retirement obligations (AROs) to $ 231 million as of December 31, 2024, mainly reflecting our change in the estimated timing of spending for asbestos abatement and decommissioning of assets at the Los Angeles Refinery.

The asset retirement obligations recorded require significant judgment and are subject to changes in the underlying assumptions.

Depreciation of the related capitalized asset retirement costs also will be recorded through December 2025, and the amount for the year ended December 31, 2024, is reflected in the accelerated depreciation discussed above.

• We recorded $ 44 million of severance costs, which are included in the “Operating expenses” line item on our consolidated statement of income for the year ended December 31, 2024.

In April 2022, we began a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure.

For the years ended December 31, 2023 and 2022, we recorded restructuring costs totaling $ 177 million and $ 160 million, respectively, primarily related to consulting fees and severance costs.

Restructuring costs for the year ended December 31, 2022, also included an impairment related to assets held for sale.

These costs are primarily recorded in the “Selling, general and administrative expenses” and “Impairments” line items on our consolidated statement of income and are reported in Corporate and Other.

In addition, for the years ended December 31, 2023 and 2022, we recorded restructuring costs of $ 38 million and $ 18 million, respectively, associated with the integration of DCP Midstream Class A Segment primarily related to severance and contract exit costs.

These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.

Note 5— Business Combinations

Marketing and Specialties Acquisition

On August 1, 2023, our M&S segment acquired a marketing business on the U.S.

West Coast for total consideration of $ 269 million.

These operations were acquired to support the placement of renewable diesel that will be produced by our Rodeo renewable fuels facility.

At December 31, 2023, we provisionally recorded $ 146 million of amortizable intangible assets, primarily customer relationships;

$ 82 million of PP&E, including finance lease right of use assets;

$ 40 million of net working capital;

Midstream Acquisitions

On July 1, 2024, we acquired Pinnacle Midland Parent LLC (Pinnacle Midstream) to expand our natural gas gathering and processing operations in the Permian Basin for cash consideration of $ 565 million.

For this acquisition, we provisionally recorded $ 325 million of PP&E, including finance lease right of use assets;

$ 256 million of amortizable intangible assets, primarily customer relationships;

$ 21 million of goodwill;

and $ 63 million of finance lease liabilities for this acquisition.

The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize our accounting for this acquisition.

$ 18 million of net working capital deficit;

$ 13 million of AROs;

and $ 6 million of finance lease liabilities.

The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize the accounting for this acquisition.

DCP Midstream Merger

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Total merger consideration $ 4,891

Index to Financial Statements

The aggregate purchase consideration noted above was allocated to the assets acquired and liabilities assumed of the entities consolidated based upon their estimated fair values as of the DCP Midstream Merger on August 17, 2022.

We finalized the valuation of the assets acquired and liabilities assumed during the three months ended September 30, 2023, prior to the end of the one-year measurement period on August 16, 2023.

The following table shows the purchase price allocation as of the date of the DCP Midstream Merger, and cumulative adjustments we made during the measurement period:

The following table shows the purchase price allocation as of the date of the DCP Midstream Merger, and cumulative adjustments we made during the one-year measurement period that ended on August 16, 2023:

Millions of Dollars

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See Note 19—Fair Value Measurements, for additional information on the determination of the fair value of the DCP Midstream Merger.

Index to Financial Statements

In connection with the DCP Midstream Merger, we recognized before-tax gains totaling $ 2,831 million from remeasuring our previously held equity investments in DCP Midstream, DCP Sand Hills and DCP Southern Hills to their fair values and a before tax gain of $ 182 million related to the transfer of a 35.75 % indirect economic interest in Gray Oak Pipeline to our co-venturer.

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Net Income Attributable to Phillips 66 per share—diluted (dollars)

Index to Financial Statements

Pending Midstream Acquisition

On January 6, 2025, we entered into a definitive agreement to acquire all issued and outstanding equity interests in each of EPIC Y-Grade GP, LLC (Y-Grade GP) and EPIC Y-Grade, LP (Y-Grade LP, and, together with Y-Grade GP and their respective subsidiaries, EPIC Y-Grade), which own various long haul natural gas liquids pipelines, fractionation facilities and distribution systems, for cash consideration of $ 2.2 billion, subject to certain closing adjustments.

The closing date of this transaction is dependent on regulatory approval and completion of other customary closing conditions.

Marketing and Specialties Acquisitions

On October 1, 2024, we acquired a marketing business on the U.S.

West Coast for total consideration of $ 65 million.

These operations were acquired to support the placement of renewable diesel produced by the Rodeo Renewable Energy Complex (Rodeo Complex).

For this acquisition, we provisionally recorded $ 17 million of amortizable intangible assets, primarily customer relationships;

$ 62 million of PP&E, including finance lease right of use assets;

$ 31 million of net working capital;

and $ 45 million of finance lease liabilities.

The fair values of the assets acquired and liabilities assumed are preliminary and subject to change until we finalize our accounting for this acquisition.

On August 1, 2023, we acquired a marketing business on the U.S.

West Coast for total consideration of $ 272 million.

These operations were acquired to support the placement of renewable diesel produced by the Rodeo Complex.

We finalized the valuation of the assets acquired and the liabilities assumed during the three months ended June 30, 2024, prior to the end of the one-year measurement period on July 31, 2024.

For this acquisition, we recorded $ 146 million of amortizable intangible assets, primarily customer relationships;

$ 82 million of PP&E, including finance lease right of use assets;

$ 40 million of net working capital;

$ 67 million of goodwill;

and $ 63 million of finance lease liabilities.

Note 6— Sales and Other Operating Revenues

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Product Line and Services

Refined petroleum products $ 108,644 131,798 89,020

Refined petroleum products and renewable fuels $ 103,685 108,644 131,798

Crude oil resales 22,008 20,824 20,574

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At December 31, 2024, the remaining performance obligations related to these minimum volume commitment contracts amounted to $ 566 million.

This amount excludes variable consideration and estimates of variable rate escalation clauses in our contracts with customers, and is expected to be recognized through 2031 with a weighted average remaining life of two years as of December 31, 2023.

Index to Financial Statements

Note 7— Credit Losses

We are exposed to credit losses primarily through our sales of refined petroleum products, crude oil, NGL and natural gas.

We are exposed to credit losses primarily through our sales of refined petroleum products, renewable fuels, renewable feedstocks, crude oil, NGL and natural gas.

We assess each counterparty’s ability to pay for the products we sell by conducting a credit review.

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Based on an aging analysis at December 31, 2024, more than 95 % of our accounts receivable were outstanding less than 60 days.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and standby letters of credit.

See Note 15—Guarantees, and Note 16—Contingencies and Commitments, for more information on these off-balance sheet exposures.

We are also exposed to credit losses from off-balance sheet exposures, such as guarantees of joint venture debt and accounts receivables sold under a securitization facility, as well as standby letters of credit.

See Note 15—Debt, Note 16—Guarantees, and Note 17—Contingencies and Commitments, for more information on these off-balance sheet exposures.

Note 8— Inventories

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Millions of Dollars

Crude oil and petroleum products $ 3,330 2,914

Crude oil and products $ 3,547 3,330

Materials and supplies 448 420

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During each of the three years ended December 31, 2024, certain volume reductions in inventory caused liquidations of LIFO inventory values.

For the years ended December 31, 2023 and 2022, LIFO inventory liquidations increased net income by $ 94 million and $ 75 million, respectively.

For the year ended December 31, 2024, LIFO inventory liquidations decreased net income by $ 10 million.

Index to Financial Statements

For the years ended December 31, 2023 and 2022, LIFO inventory liquidations increased net income by $ 94 million, and $ 75 million, respectively.

Note 9— Investments, Loans and Long-Term Receivables

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Equity Investments

Significant affiliated companies accounted for under the equity method, including nonconsolidated VIEs, at December 31, 2023 and 2022, included:

• Chevron Phillips Chemical Company LLC (CPChem) — 50 percent-owned joint venture that manufactures and markets petrochemicals and plastics.

We have multiple long-term supply and purchase agreements in place with CPChem with extension options.

These agreements cover sales and purchases of refined petroleum products, solvents, fuel gas, natural gas, NGL, and other petrochemical feedstocks.

All products are purchased and sold under specified pricing formulas based on various published pricing indices.

At December 31, 2023 and 2022, the book value of our investment in CPChem was $ 7,341 million and $ 6,785 million, respectively.

• WRB Refining LP (WRB) — 50 percent-owned joint venture that owns the Wood River and Borger refineries located in Roxana, Illinois, and Borger, Texas, respectively, for which we are the operator and managing partner.

We have a basis difference for our investment in WRB because the carrying value of our investment is lower than our share of WRB’s recorded net assets.

This basis difference was primarily the result of our contribution of these refineries to WRB.

On the contribution closing date, a basis difference was created because the fair value of the contributed assets recorded by WRB exceeded our historical book value.

The contribution-related basis difference is primarily being amortized and recognized as a benefit to equity earnings over a period of 26 years, which was the estimated remaining useful life of the refineries’ PP&E at the contribution closing date.

At December 31, 2023, the aggregate remaining basis difference for this investment was $ 1,400 million.

Equity earnings for the years ended December 31, 2023, 2022 and 2021, were increased by $ 198 million, $ 184 million and $ 186 million, respectively, due to the amortization of our aggregate basis difference.

At December 31, 2023 and 2022, the book value of our investment in WRB was $ 2,736 million and $ 2,411 million, respectively.

• Gulf Coast Express LLC (Gulf Coast Express) —DCP LP 25 percent-owned joint venture that owns an intrastate pipeline that transports natural gas from the Waha area in West Texas to Agua Dulce, in Nueces County, Texas.

The pipeline is operated by a co-venturer.

This investment was acquired as part of our consolidation of DCP Midstream Class A Segment starting on August 18, 2022, and was recorded at fair value.

We have a basis difference for our investment in Gulf Coast Express because the carrying value of our investment is higher than our share of Gulf Coast Express net assets.

The basis difference is the result of recognizing the investment at fair value.

The basis difference is being amortized and recognized as a decrease to equity earnings over a period of 20 years, which was the estimated remaining useful life of the joint venture’s PP&E at the acquisition date.

At December 31, 2023, the aggregate remaining basis difference for this investment was $ 415 million.

Equity earnings for each of the years ended December 31, 2023 and 2022, were decreased by $ 22 million and $ 7 million, respectively, due to the amortization of our basis difference.

At December 31, 2023 and 2022, the book value of our investment in Gulf Coast Express was $ 800 million and $ 844 million, respectively.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, Note 4—Business Combinations and Note 18—Fair Value Measurements, for additional information on the DCP Midstream Merger and our accounting for this transaction as a business combination.

Index to Financial Statements

• Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO) — Two 25 percent-owned joint ventures.

Dakota Access owns a pipeline system that transports crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois, and ETCO owns a connecting crude oil pipeline system that extends from Patoka to Nederland, Texas.

The following table represents our significant investments in unconsolidated affiliates at December 31:

At December 31, 2024

Millions of Dollars

VIE Ownership Percentage 2024 2023

Chevron Phillips Chemical Company LLC 50.00 % $ 7,819 7,341

WRB Refining LP *

50.00 2,323 2,736

Gulf Coast Express Pipeline LLC 25.00 776 800

Dakota Access, LLC 25.00 777 538

Front Range Pipeline LLC 33.33 459 477

Rockies Express Pipeline LLC **

CF United LLC ***

47.09 284 350

OnCue Holdings, LLC ****

X 50.00 185 166

* See Note 15—Debt, for additional information regarding the non-cash distribution of WRB Refining LP’s (WRB) Advance Term Loan, which reduced our investment balance by $ 290 million.

** Sold as of June 14, 2024.

See discussion in Investment Dispositions section below.

*** On January 1, 2024, CF United LLC (CF United) ceased to be a VIE following the completion of the acquisition of another joint venture in which we had an ownership interest.

In connection with this acquisition, the governing agreement for CF United was amended and restated.

The amended and restated agreement included removal of a put option that required us to purchase our co-venturer’s interest based on a fixed multiple that was considered a variable interest.

**** We fully guarantee various debt agreements of OnCue Holdings, LLC (OnCue), and our co-venturer does not participate in the guarantees.

This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses.

We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance.

At December 31, 2024, our maximum exposure to loss was $ 245 million, which represented the book value of our investment in OnCue of $ 185 million and guaranteed debt obligations of $ 60 million.

The following table presents significant basis differences between the carrying value of our investments in unconsolidated affiliates and our share of their underlying equity at December 31:

Millions of Dollars

Excess (deficit) of Carrying Value over (under) Underlying Equity in Unconsolidated Affiliates

WRB Refining LP $ ( 1,526 ) ( 1,400 )

Gulf Coast Express Pipeline LLC 393 415

Front Range Pipeline LLC 280 292

Rockies Express Pipeline LLC *

* Sold as of June 14, 2024.

See further discussion in “Investment Dispositions” section below.

The basis differences result from the carrying values of our investments being higher or lower than our share of the underlying equity of our unconsolidated affiliates.

Carrying amounts in excess of the underlying equity of our unconsolidated affiliates are amortized and recognized as a decrease to equity earnings over the remaining life of the underlying long-lived assets of the affiliate.

Carrying amounts that are less than the underlying equity of our unconsolidated affiliates are amortized and recognized as a benefit to equity earnings over the remaining life of the underlying long-lived assets of the affiliate.

Dakota Access, LLC (Dakota Access) and Energy Transfer Crude Oil Company, LLC (ETCO)

Dakota Access is a 25 percent-owned joint venture that owns a pipeline system transporting crude oil from the Bakken/Three Forks production area in North Dakota to Patoka, Illinois.

ETCO is a 25 percent-owned joint venture that owns a connecting crude oil pipeline system that extends from Patoka to Nederland, Texas.

These two pipeline systems collectively form the Bakken Pipeline system, which is operated by a co-venturer.

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In February 2022, the U.S.

Supreme Court (the Court) denied Dakota Access’ writ of certiorari requesting the Court to review the trial court’s decision to order the EIS and vacate the easement.

Supreme Court (the Supreme Court) denied Dakota Access’ writ of certiorari requesting the Supreme Court to review the trial court’s decision to order the EIS and vacate the easement.

Therefore, the requirement to prepare the EIS stood.

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The USACE also identified three “action” alternatives;

two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning the current pipeline and construction of a new line 39 miles upstream from the current location.

The USACE has not indicated when it will issue its final decision.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access in March 2019.

On April 1, 2022, Dakota Access’ wholly owned subsidiary repaid $ 650 million aggregate principal amount of its outstanding senior notes upon maturity.

We funded our 25 % share, or $ 163 million, with a capital contribution of $ 89 million in March 2022 and $ 74 million of distributions we elected not to receive from Dakota Access in the first quarter of 2022.

At December 31, 2023, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $ 1.85 billion.

In conjunction with the notes offering, Phillips 66 Partners, now a wholly owned subsidiary of Phillips 66, and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU).

two of them contemplate that the USACE would reissue the easement to Dakota Access under essentially the same terms as 2017 with either the same or a larger volume of oil allowed through the pipeline, while the third alternative would require decommissioning of the current pipeline and construction of a new line 39 miles upstream from the current location.

The public comment period concluded on December 13, 2023.

The USACE plans to review the comments and issue its final EIS in early 2026.

The Record of Decision will follow within 30 to 60 days after the issuance of the final EIS.

The final EIS must be completed before the USACE can reauthorize the easement for the pipeline.

If reauthorization occurs, new litigation challenging the reauthorization may be filed.

In October 2024, the Tribe filed another lawsuit against the USACE in federal district court in Washington, D.C., again challenging USACE’s allowance of pipeline operations while the EIS process proceeds.

In this lawsuit, the Tribe purports to introduce new evidence regarding the pipeline’s proximity to a reservoir and attempts to relitigate arguments about the need for injunctive relief to support its position that the Supreme Court should halt pipeline operations.

A consortium of 13 states has joined Dakota Access as intervenors.

The consortium argues that the pipeline reduces pollution compared to other modes of transportation and that Dakota Access is integral to the health of regional energy and agriculture markets.

The Tribe’s prior request for a shutdown was denied in May 2021.

This latest lawsuit seeking a shutdown does not change the current deadline for the issuance of the final EIS.

Dakota Access and ETCO have guaranteed repayment of senior unsecured notes issued by a wholly owned subsidiary of Dakota Access.

On April 1, 2024, Dakota Access’ wholly owned subsidiary repaid $ 1 billion aggregate principal amount of its outstanding senior notes upon maturity.

We funded our 25 % share of the repayment, or $ 250 million, with a capital contribution of $ 171 million in March 2024 and $ 79 million of distributions we elected not to receive from Dakota Access in the first quarter of 2024.

At December 31, 2024, the aggregate principal amount outstanding of Dakota Access’ senior unsecured notes was $ 850 million.

In addition, Phillips 66 Partners and its co-venturers in Dakota Access also provided a Contingent Equity Contribution Undertaking (CECU) in conjunction with the notes offering.

Under the CECU, the co-venturers may be severally required to make proportionate equity contributions to Dakota Access if there is an unfavorable final judgment in the above-mentioned ongoing litigation.

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At December 31, 2024 and 2023, the aggregate book value of our investments in Dakota Access and ETCO was $ 883 million and $ 640 million, respectively.

Index to Financial Statements

• Front Range Pipeline LLC (Front Range) —DCP LP 33 percent-owned joint venture that owns an NGL pipeline that originates in the DJ Basin and extends to Skellytown, Texas.

The pipeline is operated by a co-venturer.

This investment was acquired as part of our consolidation of DCP Midstream Class A Segment starting on August 18, 2022, and was recorded at fair value.

We have a basis difference for our investment in Front Range because the carrying value of our investment is higher than our share of Front Range net assets.

The basis difference is the result of recognizing the investment at fair value.

At December 31, 2023, the aggregate remaining basis difference for this investment was $ 292 million.

Equity earnings for each of the years ended December 31, 2023 and 2022, were decreased by $ 16 million and $ 5 million, respectively, due to the amortization of our basis difference.

At December 31, 2023 and 2022, the book value of our investment in Front Range was $ 477 million and $ 499 million, respectively.

• Rockies Express Pipeline LLC (REX) — 25 percent-owned joint venture that owns a natural gas pipeline system that extends from Wyoming and Colorado to Ohio with a bidirectional section that extends from Ohio to Illinois.

The REX Pipeline system is operated by our co-venturer.

We have a basis difference for our investment in REX because the carrying value of our investment is lower than our share of REX’s recorded net assets.

This basis difference was created by historical impairment charges we recorded for this investment and is being amortized and recognized as a benefit to equity earnings over a period of 25 years, which was the estimated remaining useful life of REX’s PP&E when the impairment charges were recorded.

At December 31, 2023, the remaining basis difference for this investment was $ 261 million.

Equity earnings for each of the years ended December 31, 2023, 2022 and 2021, were increased by $ 19 million due to the amortization of our basis difference.

At December 31, 2023 and 2022, the book value of our investment in REX was $ 451 million and $ 483 million, respectively.

• CF United LLC (CF United) —A retail marketing joint venture with operations primarily on the U.S.

We own a 50 % voting interest and a 48 % economic interest in this joint venture.

At December 31, 2023, CF United was considered a VIE because our co-venturer had an option to require us to purchase its interest based on a fixed multiple.

The put option became effective July 1, 2023, and was scheduled to expire on March 31, 2024.

The put option was viewed as a variable interest as the purchase price on the exercise date may not represent the then-current fair value of CF United.

We determined that we were not the primary beneficiary of CF United because we and our co-venturer jointly directed the activities that most significantly impacted economic performance.

At December 31, 2023, our maximum exposure to loss was comprised of our $ 291 million investment in CF United.

At December 31, 2022, the book value of our investment in CF United was $ 296 million.

Effective January 1, 2024, in connection with an acquisition by CF United of another joint venture in which we have an ownership interest, the governing agreement for the CF United joint venture was amended and restated.

The amended and restated agreement included removal of the put option that required us to purchase our co-venturer’s interest based on a fixed multiple.

Accordingly, CF United ceased to be a VIE effective January 1, 2024.

• OnCue Holdings, LLC (OnCue) — 50 percent-owned joint venture that owns and operates retail convenience stores.

We fully guaranteed various debt agreements of OnCue, and our co-venturer did not participate in the guarantees.

This entity is considered a VIE because our debt guarantees resulted in OnCue not being exposed to all potential losses.

We have determined we are not the primary beneficiary because we do not have the power to direct the activities that most significantly impact economic performance.

At December 31, 2023, our maximum exposure to loss was $ 231 million, which represented the book value of our investment in OnCue of $ 166 million and guaranteed debt obligations of $ 65 million.

At December 31, 2022, the book value of our investment in OnCue was $ 138 million.

Index to Financial Statements

• DCP Midstream, DCP Sand Hills, DCP Southern Hills, and Gray Oak Pipeline —Prior to the DCP Midstream Merger on August 17, 2022, we held:

◦ A 50 % interest in DCP Midstream a joint venture that owns and operates NGL and gas pipelines, gas plants, gathering systems, storage facilities and fractionation plants, through its subsidiary DCP LP.

◦ A 33.33 % direct ownership interest in DCP Sand Hills a joint venture that owns a NGL pipeline system that extends from the Permian Basin and Eagle Ford to facilities on the Texas Gulf Coast and to the Mont Belvieu, Texas, market hub.

◦ A 33.33 % direct ownership interest in DCP Southern Hills a joint venture that owns a NGL pipeline system that extends from the Midcontinent region to the Mont Belvieu, Texas, market hub.

◦ A 65 % interest in Gray Oak Pipeline, which was held through a consolidated holding company, Gray Oak Holdings.

Our indirect interest in Gray Oak Pipeline was 42.25 %, after considering a co-venturer’s 35 % interest in Gray Oak Holdings.

Gray Oak Pipeline is a crude oil pipeline that extends from the Permian and Eagle Ford to Texas Gulf Coast destinations that include Corpus Christi, Texas, and the Sweeny area, including our Sweeny Refinery.

As a result of the DCP Midstream Merger, effective August 18, 2022, we began consolidating the financial results of DCP Midstream Class A Segment, DCP Sand Hills and DCP Southern Hills and our indirect economic interest in Gray Oak Pipeline was reduced to 6.5 %.

After the DCP Midstream Merger, our indirect economic interest in Gray Oak Pipeline is held through our economic interest in DCP Midstream Class B Segment.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, and Note 4—Business Combinations, for additional information regarding the DCP Midstream Merger and associated accounting treatment.

At December 31, 2023 and December 31, 2022, the book value of our investment in DCP Midstream Class B Segment was $ 75 million and $ 79 million, respectively.

• Liberty Pipeline LLC (Liberty) —In the first quarter of 2021, Phillips 66 Partners’ decided to exit the Liberty Pipeline project, which resulted in a $ 198 million before-tax impairment.

The impairment is included in the “Impairments” line item on our consolidated statement of income for the year ended December 31, 2021.

In April 2021, Phillips 66 Partners transferred its ownership interest in Liberty to its co-venturer for cash and certain pipeline assets with a value that approximated its book value of $ 46 million at March 31, 2021.

See Note 11—Impairments, and Note 18—Fair Value Measurements, for additional information regarding the impairment and the techniques used to determine the fair value of Phillips 66 Partners’ investment in Liberty.

Midstream Investment Disposition

On August 1, 2023, we sold our 25 % ownership interest in the South Texas Gateway Terminal for approximately $ 275 million and recognized a before-tax gain of $ 101 million.

The before-tax gain is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2023, and is reported in the Midstream segment.

Index to Financial Statements

Other Investments

In September 2021, we acquired 78 million ordinary shares, representing a 16 % ownership interest, in NOVONIX Limited (NOVONIX), for $ 150 million.

NOVONIX is a Brisbane, Australia-based company that develops technology and supplies materials for lithium-ion batteries and its shares are traded on the Australian Securities Exchange.

Since we do not have significant influence over the operating and financial policies of NOVONIX and the shares we own have a readily determinable fair value, our investment is recorded at fair value at the end of each reporting period.

The fair value of our investment is recorded in the “Investments and long-term receivables” line item on our consolidated balance sheet.

The change in the fair value of our investment due to fluctuations in NOVONIX’s stock price, or unrealized investment gain (losses), is recorded in the “Other income” line item of our consolidated statement of income, while changes due to foreign currency fluctuations are recorded in the “Foreign currency transaction (gains) losses” line item on our consolidated statement of income.

At December 31, 2023 and 2022, the fair value of our investment in NOVONIX was $ 39 million and $ 78 million, respectively.

The fair value of our investment in NOVONIX declined by $ 39 million and $ 442 million during the years ended December 31, 2023 and 2022, respectively, and increased by $ 370 million during the year ended December 31, 2021.

The declines in fair value in 2023 and 2022 were primarily related to unrealized investment losses, while the increase in 2021 was primarily related to unrealized investment gains.

See Note 18—Fair Value Measurements, for additional information regarding the recurring fair value measurement of our investment in NOVONIX.

Investment Dispositions

On December 10, 2024, we sold our equity interests in certain pipeline and terminaling assets in North Dakota for cash proceeds of approximately $ 143 million and recorded an immaterial before-tax loss on the sale.

On August 1, 2024, we sold our ownership interests in certain gathering and processing assets in Louisiana and Alabama for cash proceeds of $ 173 million and recognized a before-tax gain of $ 18 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.

On June 14, 2024, we sold our 25 % ownership interest in Rockies Express Pipeline LLC for cash proceeds of $ 685 million and recognized a before-tax gain of $ 238 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024, and is reported in the Midstream segment.

Subsequent Investment Dispositions

On January 30, 2025, we sold our 25 % ownership interest in Gulf Coast Express Pipeline LLC for cash proceeds of $ 853 million.

The equity investment balance was $ 776 million as of December 31, 2024.

On January 31, 2025, we sold our 49 % ownership interest in Coop Mineraloel AG (Coop).

We received cash proceeds of 1.06 billion Swiss francs, consisting of a sales price of approximately 977 million Swiss francs and a final dividend relating to financial year 2024 of 83 million Swiss francs from Coop that was paid on January 30, 2025.

We also settled the foreign currency forward contracts entered into in connection with the asset sale, in which we sold 1.06 billion Swiss francs in exchange for $ 1.24 billion U.S.

We recognized a before-tax unrealized gain of $ 67 million from the foreign currency forward contracts in the “Net gain on dispositions” line item on our consolidated income statement for the year ended December 31, 2024, which is reported in our M&S segment.

The equity investment balance was $ 164 million as of December 31, 2024.

Related Party Loans

We and our co-venturer have provided member loans to WRB.

We and our co-venturer have from time to time provided member loans to WRB.

At December 31, 2024 and 2023, no member loans were outstanding.

Equity Affiliate Distributions

Total distributions received from affiliates were $ 1,396 million, $ 1,832 million, and $ 3,043 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Total cash distributions received from affiliates were $ 1,525 million, $ 1,396 million, and $ 1,832 million for the years ended December 31, 2024, 2023 and 2022, respectively.

In addition, at December 31, 2024, retained earnings included approximately $ 3.7 billion related to the undistributed earnings of affiliated companies.

Summarized Equity Affiliate Financial Information

Summarized 100% financial information for all affiliated companies accounted for under the equity method, on a combined basis, was:

Summarized 100% financial information for all affiliated companies accounted for under the equity method, on a combined basis, as of and for the year ended December 31 was:

Millions of Dollars

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Noncontrolling interests 2 2 2

Index to Financial Statements

Note 10— Properties, Plants and Equipment

Our investment in PP&E is recorded at cost.

Investments in refining and processing facilities are generally depreciated on a straight-line basis over a 25 -year life, pipeline assets over a 45 -year life and terminal assets over a 35 -year life.

Investments in refining and processing facilities are generally depreciated on a straight-line basis over a 25-year life, pipeline assets over a 45 -year life, terminal assets over a 35 -year life, and gathering systems over a 35-year life.

The company’s investment in PP&E, with the associated accumulated depreciation and amortization (Accum.

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Marketing and Specialties 2,091 1,267 824 1,997 1,166 831

Renewable Fuels 3,716 1,669 2,047 2,311 953 1,358

Corporate and Other 1,688 945 743 1,650 829 821

$ 55,956 20,692 35,264 55,192 19,480 35,712

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, Note 4—Business Combinations and Note 18—Fair Value Measurements, for additional information on the DCP Midstream Merger, accounting treatment and the associated fair value measurements.

See Note 11—Impairments, for information regarding PP&E impairments associated with our Alliance Refinery asset group.

See Note 28—Segment Disclosures and Related Information, for information regarding the change in the composition of our operating segments.

Index to Financial Statements

See Note 4—Restructuring for information regarding our intention to cease operations at our Los Angeles Refinery.

See Note 5—Business Combinations and Note 19—Fair Value Measurements, for additional information on the DCP Midstream Merger, accounting treatment and the associated fair value measurements.

See Note 12—Impairments, for information regarding PP&E impairments.

On August 30, 2024, we sold certain Midstream gathering and processing assets in Texas for cash proceeds of $ 41 million and recognized a before-tax loss of $ 9 million, which is included in the “Net gain on dispositions” line item on our consolidated statement of income for the year ended December 31, 2024.

In the first quarter of 2024, we transferred $ 1 billion in gross PP&E and $ 656 million of accumulated depreciation and amortization from our Refining segment to our Renewable Fuels segment in connection with the conversion of the San Francisco Refinery to the Rodeo Complex and the change in composition of our operating segments recast in the second quarter of 2024.

See Note 29—Segment Disclosures and Related Information, for information regarding changes to our operating segments.

Note 11— Goodwill and Intangibles

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Balance at December 31, 2024 $ 648 927 1,575

On July 1, 2024, we acquired Pinnacle Midstream in our Midstream segment and recognized goodwill of $ 21 million associated with this acquisition.

In August 2023, we acquired a marketing business on the U.S.

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Intangible Assets

Intangible Assets with Indefinite Useful Lives

The gross carrying value of indefinite-lived intangible assets at December 31 consisted of the following:

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Refinery air and operating permits 109 196

The net book value of our amortized intangible assets was $ 220 million and $ 128 million at December 31, 2023 and 2022, respectively.

For the years ended December 31, 2023, 2022 and 2021, amortization expense was $ 33 million, $ 27 million and $ 26 million, respectively, and is expected to be less than $ 35 million per year in future years.

Intangible Assets with Finite Useful Lives

The net book value of our amortized intangible assets was $ 549 million at December 31, 2024, and $ 220 million at December 31, 2023.

These balances include accumulated amortization of $ 408 million and $ 234 million, at December 31, 2024 and 2023, respectively.

The amortized intangible assets are primarily related to customer relationships.

For the years ended December 31, 2024, 2023 and 2022, amortization expense was $ 53 million, $ 33 million and $ 27 million, respectively.

Expected expenses beyond 2025 are less than $ 50 million per year.

The amortization expenses are expected to be $ 130 million in 2025, which is primarily related to our plan to cease operations at our Los Angeles Refinery.

The book value of the amortized intangible assets, which were previously considered indefinite-lived, associated with our Los Angeles Refinery was $ 80 million at December 31, 2024.

Refer to Note 4—Restructuring, for additional information regarding our plan to cease operations at our Los Angeles Refinery.

On July 1, 2024, we acquired Pinnacle Midstream in our Midstream segment and recorded additions of $ 256 million in amortizable intangible assets, which have a weighted-average amortization period of 20 years.

Also during 2024, we recorded additions of $ 17 million in amortizable intangible assets associated with the acquisition of a marketing business on the U.S.

West Coast in our M&S segment.

In August 2023, we acquired a marketing business on the U.S.

West Coast, in our M&S segment and recorded additions of $ 146 million in amortized intangible assets.

Acquisitions of amortized intangible assets were not material in 2022.

Index to Financial Statements

West Coast in our M&S segment and recorded additions of $ 146 million in amortizable intangible assets.

Note 12— Impairments

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Total impairments $ 456 24 60

Equity Investments

In the first quarter of 2021, Phillips 66 Partners decided to exit the Liberty Pipeline project in our Midstream segment, which had previously been deferred due to the challenging business environment caused by the COVID-19 pandemic.

As a result, Phillips 66 Partners recorded a $ 198 million before-tax impairment to reduce the book value of its investment in Liberty at March 31, 2021, to estimated fair value.

PP&E and Intangible Assets

Alliance Refinery

In the third quarter of 2021, we identified impairment indicators related to our Alliance Refinery as a result of damages sustained from Hurricane Ida and our reassessment of the role this refinery would play in our refining portfolio.

Accordingly, we assessed the refinery asset group for impairment by performing an analysis that considered several usage scenarios, including selling or converting the asset group to an alternative use.

Based on our analysis, we concluded that the carrying value of the asset group was not recoverable.

As a result, we recorded a $ 1,298 million before-tax impairment to reduce the carrying value of net PP&E in this asset group to its fair value of approximately $ 200 million.

$ 1,288 million of the impairment charge was recorded in our Refining segment and $ 10 million was recorded in our Midstream segment.

In the fourth quarter of 2021, we shut down our Alliance Refinery.

For the year ended December 31, 2024, we recorded before-tax impairments totaling $ 456 million, which included $ 346 million recorded in our Midstream segment and $ 106 million recorded in our Refining segment.

Midstream segment impairments included $ 224 million related to certain gathering and processing assets in Texas, $ 35 million related to an equity investment in a crude pipeline in Oklahoma, and $ 28 million related to certain crude gathering assets in Texas.

Before-tax impairments for the year ended December 31, 2024 also included $ 163 million related to certain crude oil processing and logistics assets in California, of which $ 104 million was reported in our Refining segment and $ 59 million was reported in our Midstream segment.

These impairment charges are included within the “Impairments” line item on our consolidated income statement.

See Note 18—Fair Value Measurements, for additional information on the determination of fair value use to record these impairments.

Index to Financial Statements

See Note 19—Fair Value Measurements, for additional information on the determination of fair value used to record these impairments.

Note 13— Asset Retirement Obligations and Accrued Environmental Costs

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Asset retirement obligations and accrued environmental costs due within one year* ( 81 ) ( 119 )

( 119 ) ( 120 )

Long-term asset retirement obligations and accrued environmental costs $ 1,129 864

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We have asset retirement obligations that we are required to perform under law or contract once an asset is permanently taken out of service.

Our recognized asset retirement obligations primarily involve asbestos abatement at our refineries;

decommissioning, removal or dismantlement of certain assets at refineries that have or will be shut down;

Our recognized asset retirement obligations primarily involve asbestos abatement at our current refineries, or at sites we own that were previously utilized as refineries;

decommissioning, removal or dismantlement of certain assets at refineries that have ceased or will cease operations;

decommissioning, removal or dismantlement of certain midstream pipelines and processing facilities;

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Most of our asset retirement obligations are not expected to be paid until many years in the future and are expected to be funded from general company resources at the time of removal.

During the years ended December 31, 2023 and 2022, our overall asset retirement obligation changed as follows:

Our overall asset retirement obligation changed as follows during the years ended December 31:

Millions of Dollars

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New obligations 261 —

Acquisition of DCP Midstream Class A Segment, DCP Sand Hills and DCP

Southern Hills — 168

Changes in estimates of existing obligations 33 23

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Balance at December 31 $ 771 537

Index to Financial Statements

During the year ended December 31, 2024, our asset retirement balance increased $ 234 million.

This increase was primarily due to new obligations of $ 205 million associated with the expected cessation of operations at the Los Angeles Refinery in the fourth quarter of 2025.

See Note 4—Restructuring, for additional information.

Accrued Environmental Costs

Of our total accrued environmental costs at December 31, 2023, $ 279 million was primarily related to cleanup at domestic refineries and underground storage tanks at U.S.

Of our total accrued environmental costs at December 31, 2024, $ 280 million was primarily related to cleanup at current domestic refineries, or at sites we own that were previously utilized as domestic refineries, and underground storage tanks at U.S.

service stations;

$ 117 million was associated with nonoperator sites;

$ 111 million was associated with non-operated sites;

and $ 48 million was related to sites at which we have been named a potentially responsible party under federal or state laws.

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Income allocated to participating securities ( 10 ) ( 10 ) ( 11 ) — ( 10 ) —

Premium paid for the repurchase of noncontrolling

— — — — ( 2 ) ( 2 )

Net income available to common stockholders $ 2,107 2,107 7,004 7,015 11,014 11,024

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$ 5.01 4.99 15.56 15.48 23.36 23.27

Index to Financial Statements

Note 15— Debt

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$ — — 59 — 59

2.450 % Senior Notes due December 2024

— 277 23 — 300

3.605 % Senior Notes due February 2025

— 441 59 — 500

3.850 % Senior Notes due April 2025

650 — — — 650

5.375 % Senior Notes due July 2025

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850 — — — 850

5.250 % Senior Notes due June 2031

— 1,200 — — 1,200

3.250 % Senior Notes due February 2032

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1,000 — — — 1,000

4.950 % Senior Notes due March 2035

— 600 — — 600

6.450 % Senior Notes due November 2036

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1,000 — — — 1,000

Securitization facility due August 2024 — — — 350 350

Floating Rate Term Loan due June 2026 at 6.456 % at year-end 2023

5.650 % Senior Notes due June 2054

— 500 — — 500

Floating Rate Advance Term Loan due 2035 at 6.096 % at year end 2023—related party

Floating Rate Advance Term Loan due 2038 at 6.490 % at year-end 2023—related party

5.500 % Senior Notes due March 2055

— 600 — — 600

Revolving credit facility due 2027 at 6.512 % at year-end 2023

Commercial paper due January 2025 at 4.695 % at year-end 2024

435 — — — 435

Uncommitted Facility due July 2025 at 5.300 % at year-end 2024

— 400 — — 400

Receivables Securitization Facility due September 2025 at 5.182 % at year-end 2024

— 375 — — 375

Floating Rate Term Loan due June 2026 at

5.445 % at year-end 2024

— 550 — — 550

Other 1 — — — 1

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Long-term debt $ 18,231

Index to Financial Statements

Millions of Dollars

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Phillips 66 Phillips 66 Company Phillips 66 Partners DCP LP Total

3.875 % Senior Notes due March 2023

$ — — — 500 500

0.900 % Senior Notes due February 2024

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— — — 500 500

4.950 % Senior Notes due December 2027

— 750 — — 750

3.750 % Senior Notes due March 2028

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— — — 400 400

5.300 % Senior Notes due June 2033

— 500 — — 500

4.650 % Senior Notes due November 2034

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1,500 — — — 1,500

5.850 % Junior Subordinated Notes due May 2043

— — — 550 550

5.600 % Senior Notes due April 2044

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Securitization facility due August 2024 — — — 350 350

Floating Rate Advance Term Loan due December 2034 at 4.720 % at year-end 2022—related party

Floating Rate Term Loan due June 2026 at 6.456 % at year-end 2023

— 1,250 — — 1,250

Floating Rate Advance Term Loan due 2035 at 6.096 % at year-end 2023—related party

Floating Rate Advance Term Loan due 2038 at 6.490 % at year-end 2023—related party

265 — — — 265

Revolving Credit Facility due 2027 6.512 % at year-end 2023

Other 1 — — — 1

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Maturities of borrowings outstanding at December 31, 2024, inclusive of net unamortized discounts and debt issuance costs, for each of the years from 2025 through 2029 are $ 1,831 million, $ 1,578 million, $ 1,262 million, $ 1,331 million and $ 1,228 million, respectively.

Index to Financial Statements

2023 Activities

Debt Repayments

On September 9, 2024, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $ 1.8 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

• $ 600 million aggregate principal amount of 5.250 % Senior Notes due 2031 (Additional 2031 Notes).

• $ 600 million aggregate principal amount of 4.950 % Senior Notes due 2035 (2035 Notes).

• $ 600 million aggregate principal amount of 5.500 % Senior Notes due 2055 (2055 Notes).

Interest on the Additional 2031 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on December 15, 2024.

Interest on the 2035 Notes and 2055 Notes is payable semi-annually on March 15 and September 15, commencing on March 15, 2025.

On February 28, 2024, Phillips 66 Company issued $ 1.5 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

• $ 600 million aggregate principal amount of 5.250 % Senior Notes due 2031 (2031 Notes).

• $ 400 million aggregate principal amount of 5.300 % Senior Notes due 2033 (Additional 2033 Notes).

• $ 500 million aggregate principal amount of 5.650 % Senior Notes due 2054 (2054 Notes).

Interest on the 2031 Notes and 2054 Notes is payable semi-annually on June 15 and December 15 of each year and commenced on June 15, 2024.

Interest on the Additional 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on June 30, 2024.

On March 29, 2023, Phillips 66 Company issued $ 1.25 billion aggregate principal amount of senior unsecured notes that are fully and unconditionally guaranteed by Phillips 66.

The senior unsecured notes issuance consisted of:

• $ 750 million aggregate principal amount of 4.950 % Senior Notes due December 2027.

• $ 500 million aggregate principal amount of 5.300 % Senior Notes due June 2033.

On December 16, 2024, upon maturity, Phillips 66 Company and Phillips 66 Partners repaid the 2.450 % Senior Notes due December 2024 with an aggregate principal amount of $ 300 million.

On March 29, 2024, DCP LP redeemed $ 300 million of its 5.375 % Senior Notes due July 2025.

After the redemption, an aggregate principal amount of $ 525 million remained outstanding.

On March 4, 2024, Phillips 66 Company repaid $ 700 million of the $ 1.25 billion borrowed under its delayed draw term loan that matures in June 2026.

On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900 % senior notes due February 2024 with an aggregate principal amount of $ 800 million.

On May 19, 2023, DCP LP redeemed its 5.850 % junior subordinated notes due May 2043 with an aggregate principal amount outstanding of $ 550 million.

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On March 15, 2023, DCP LP repaid its 3.875 % senior unsecured notes due March 2023 with an aggregate principal amount of $ 500 million.

Debt Issuances

On March 29, 2023, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, issued $ 1.25 billion aggregate principal amount of senior unsecured notes consisting of:

• $ 750 million aggregate principal amount of 4.950 % Senior Notes due December 2027 (2027 Notes).

• $ 500 million aggregate principal amount of 5.300 % Senior Notes due June 2033 (2033 Notes).

The 2027 Notes and 2033 Notes (collectively, the Notes) are fully and unconditionally guaranteed by Phillips 66.

Interest on the 2027 Notes is payable semi-annually on June 1 and December 1 of each year and commenced on December 1, 2023.

Interest on the 2033 Notes is payable semi-annually on June 30 and December 30 of each year and commenced on December 30, 2023.

Discharge of Senior Notes

On September 20, 2024, we extinguished (i) the remaining $ 441 million outstanding principal amount of Phillips 66 Company’s 3.605 % senior notes due February 2025 (2025 P66 Co Notes), and (ii) the remaining $ 650 million outstanding principal amount of Phillips 66’s 3.850 % senior notes due April 2025 (the 2025 PSX Notes, and together with the 2025 P66 Co Notes, the Discharged Notes), whereby we irrevocably transferred a total of $ 1,100 million in government obligations to the trustee of the 2025 P66 Co Notes and the 2025 PSX Notes.

The cash paid to purchase the government obligations is included within investing cash flows on our consolidated statement of cash flows.

These government obligations will yield sufficient principal and interest over their remaining term to permit the trustee to satisfy the remaining principal and interest due on the Discharged Notes.

Phillips 66 and Phillips 66 Company are no longer the primary obligors under the Discharged Notes.

The transfer of the government obligations to the trustee was accounted for as a transfer of financial assets.

If the trustee is unable to apply the government obligations to fund the remaining principal and interest payments on the Discharged Notes, then the Company’s obligations under the Indenture with respect to the Discharged Notes will be revived and reinstated.

We deem the likelihood of such event to be remote with no impact to the legal isolation of the assets.

Accordingly, the senior notes and the government obligations were derecognized on our balance sheet at December 31, 2024.

For the year ended December 31, 2024, we recognized an immaterial gain on the extinguishment of this debt.

Term Loan Agreement

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or (b) the reference rate plus the applicable margin, as defined in the Term Loan Agreement.

At December 31, 2023, $ 1.25 billion was borrowed under the Term Loan Agreement, which matures in June 2026.

At December 31, 2024 and 2023, $ 550 million and $ 1.25 billion were borrowed under the Term Loan Agreement, which matures in June 2026, respectively.

Related Party Advance Term Loan Agreements

Borrowings under related party Advance Term Loan agreements with WRB increased from $ 25 million at December 31, 2022, to $ 290 million at December 31, 2023.

Borrowings under these agreements are due in 2035 and 2038 and bear interest at a floating rate based on an adjusted term SOFR plus an applicable margin, payable on the last day of each month.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for additional information regarding the DCP LP Merger.

Index to Financial Statements

2022 Activities

Debt Repayments

In December 2022, Phillips 66 repaid its 3.700 % senior notes due April 2023 with an aggregate principal amount of $ 500 million.

In April 2022, upon maturity, Phillips 66 repaid its 4.300 % senior notes with an aggregate principal amount of $ 1 billion and Phillips 66 Partners repaid its $ 450 million term loan.

DCP Midstream Class A Segment

As a result of the DCP Midstream Merger, we recorded the fair value of DCP Midstream Class A Segment’s debt to our consolidated balance sheet as of August 17, 2022.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, Note 4—Business Combinations, and Note 18—Fair Value Measurements, for additional information regarding the DCP Midstream Merger and the associated fair value measurements.

All of DCP Midstream Class A Segment’s debt is held by DCP LP.

Interest on all of DCP LP’s senior notes and junior subordinated notes is paid on a semi-annual basis.

Debt Exchange

On May 5, 2022, Phillips 66 Company, a wholly owned subsidiary of Phillips 66, completed offers to exchange (the Exchange Offers) all validly tendered notes of seven different series of notes issued by Phillips 66 Partners (collectively, the Old Notes), with an aggregate principal amount of approximately $ 3.5 billion, for notes issued by Phillips 66 Company (collectively, the New Notes).

The New Notes are fully and unconditionally guaranteed by Phillips 66 and rank equally with Phillips 66 Company’s other unsecured and unsubordinated indebtedness, and the guarantees rank equally with Phillips 66’s other unsecured and unsubordinated indebtedness.

Old Notes with an aggregate principal amount of approximately $ 3.2 billion were tendered in the Exchange Offers.

The New Notes have the same interest rates, interest payment dates and maturity dates as the Old Notes.

Holders that validly tendered before the end of the early participation period on April 19, 2022 (the Early Participation Date), received New Notes with an aggregate principal amount equivalent to the Old Notes, while holders that validly tendered after the Early Participation Date, but before the Expiration Date, received New Notes with an aggregate principal amount 3 % less than the Old Notes.

Substantially all of the Old Notes exchanged were tendered during the Early Participation Period.

Subsequent Repayment

On February 15, 2024, upon maturity, Phillips 66 repaid its 0.900 % senior notes due February 2024 with an aggregate principal amount of $ 800 million.

At December 31, 2023, borrowings outstanding under our Advance Term Loan agreements with WRB totaled $ 290 million.

Borrowings under these agreements were due between 2035 and 2038 and bore interest at a floating rate based on an adjusted term SOFR plus an applicable margin, payable on the last day of each month.

On December 31, 2024, WRB distributed its Advance Term Loan with a principal balance of $ 290 million, including the right to receive any accrued but unpaid interest, to Phillips 66 Company, resulting in the reduction of our related party debt balance and our investment in WRB by $ 290 million.

The distribution was recognized as a non-cash investing and financing transaction.

Accounts Receivable Securitization

On September 30, 2024, Phillips 66 Company entered into a 364 -day, $ 500 million accounts receivable securitization facility (the Receivables Securitization Facility).

Under the Receivables Securitization Facility, Phillips 66 Company sells or contributes on an ongoing basis, certain of its receivables, together with related security and interests in the proceeds thereof, to its wholly owned subsidiary, Phillips 66 Receivables LLC (P66 Receivables), a consolidated and bankruptcy-remote special purpose entity created for the sole purpose of transacting under the Receivables Securitization Facility.

Under the Receivables Securitization Facility, P66 Receivables may borrow and incur indebtedness from, and/or sell certain receivables in an amount not to exceed $ 500 million in the aggregate, and will secure its obligations with a pledge of undivided interests in such receivables, together with related security and interests in the proceeds thereof, to PNC Bank, National Association, as Administrative Agent, for the benefit of the secured parties thereunder.

Accounts outstanding under the Receivables Securitization Facility accrue interest at an adjusted SOFR plus the applicable margin.

In all instances, Phillips 66 Company retains the servicing of the accounts receivables transferred.

P66 Receivables’ sole activity consists of purchasing receivables from Phillips 66 Company, providing those receivables as collateral for P66 Receivables’ borrowings or on-selling certain of its receivables under the Receivables Securitization Facility.

P66 Receivables is a separate legal entity with its own separate creditors, who will be entitled, upon its liquidation, to be satisfied out of P66 Receivables’ assets prior to assets or value in P66 Receivables becoming available to P66 Receivables’ equity holders.

The assets of P66 Receivables, including any funds of P66 Receivables that may be commingled with funds of any of its affiliates for purposes of cash management and related efficiencies, are not available to pay creditors of Phillips 66 Company, Phillips 66 or any affiliate thereof.

Collections on receivables in excess of amounts owed by P66 Receivables under the Receivables Securitization Facility are available to P66 Receivables for payment to Phillips 66 Company, for sales of its receivables to P66 Receivables under the Receivables Securitization Facility, and otherwise for distribution to Phillips 66 Company, in each case, subject to the terms set forth in the Receivables Securitization Facility.

The amount available for borrowing or sale of receivables may be limited by the availability of eligible receivables and other customary factors and conditions, as well as the covenants set forth in the Receivables Securitization Facility.

Sales of accounts receivables under the Receivables Securitization Facility meet the sale criteria under ASC 860, Transfers and Servicing, and are derecognized from the consolidated balance sheet.

P66 Receivables guarantees payment, in full, for accounts receivables sold to the purchasers.

Cash receipts from the sale of accounts receivables under the Receivables Securitization Facility, received at the time of sale, are classified as cash flows from operating activities.

For the year-ended December 31, 2024, we sold $ 125 million of accounts receivables in exchange for a $ 125 million reduction in our borrowings under the Receivables Securitization Facility, which was recognized as a non-cash financing transaction.

We recognized an immaterial charge associated with the transfer of financial assets, which is included as a component within the line item “Selling, general and administrative expense” on our consolidated statement of income during the year ended December 31, 2024.

At December 31, 2024, $ 121 million of the sold accounts receivable remained outstanding, which represents our maximum potential future exposure under the guarantee.

Borrowings under the Receivables Securitization Facility are recognized as short-term debt on the consolidated balance sheet.

Borrowings are secured by the accounts receivables, held by P66 Receivables, which remain reported as accounts receivables on the consolidated balance sheet.

At December 31, 2024, we had outstanding borrowings of $ 375 million under the Receivables Securitization Facility, secured by approximately $ 4.6 billion of accounts receivable held by P66 Receivables.

At December 31, 2024, we had no unused capacity under the Receivables Securitization Facility.

Credit Facilities and Commercial Paper

Phillips 66 and Phillips 66 Company

On June 23, 2022, we entered into a $ 5 billion revolving credit facility (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of June 22, 2027.

The Facility replaced our previous $ 5 billion revolving credit facility with Phillips 66 as the borrower and Phillips 66 Company as the guarantor.

The Facility contains usual and customary covenants that are similar to the previous revolving credit facility, including a maximum consolidated net debt-to-capitalization ratio of 65 % as of the last day of each fiscal quarter.

On January 13, 2025, we entered into a $ 200 million uncommitted credit facility (the 2025 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor.

The 2025 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities.

The 2025 Uncommitted Facility has no commitment fees or compensating balance requirements.

Outstanding borrowings under the 2025 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR plus the applicable margin, (b) the adjusted daily simple SOFR plus the applicable margin or (c) the base rate, in each case plus the applicable margin.

Each borrowing matures six months from the date of such borrowing.

We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty.

At February 21, 2025, no amount had been drawn under the 2025 Uncommitted Facility.

On June 25, 2024, we entered into a $ 400 million uncommitted credit facility (the 2024 Uncommitted Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor.

The 2024 Uncommitted Facility contains covenants and events of default customary for unsecured uncommitted facilities.

The 2024 Uncommitted Facility has no commitment fees or compensating balance requirements.

Outstanding borrowings under the 2024 Uncommitted Facility bear interest at a rate of either (a) the adjusted term SOFR, (b) the adjusted daily simple SOFR or (c) the reference rate, in each case plus the applicable margin.

Each borrowing matures six months from the date of such borrowing.

We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty.

At December 31, 2024, the entire $ 400 million had been drawn under the 2024 Uncommitted Facility.

On February 28, 2024, we entered into a new $ 5 billion revolving credit agreement (the Facility) with Phillips 66 Company as the borrower and Phillips 66 as the guarantor and a scheduled maturity date of February 28, 2029.

The Facility replaced our previous $ 5 billion revolving credit facility dated as of June 23, 2022, with Phillips 66 Company as the borrower and Phillips 66 as the guarantor, and the previous revolving credit facility was terminated.

The Facility contains customary covenants similar to the previous revolving credit facility, including a maximum consolidated net debt-to-capitalization ratio of 65 % as of the last day of each fiscal quarter.

The Facility has customary events of default, such as nonpayment of principal when due;

nonpayment of interest, fees or other amounts after grace periods;

and violation of covenants.

We may at any time prepay outstanding borrowings under the Facility, in whole or in part, without premium or penalty.

We have the option to increase the overall capacity to $ 6 billion, subject to certain conditions.

We also have the option to extend the scheduled maturity of the Facility for up to two additional one -year terms, subject to, among other things, the consent of the lenders holding the majority of the commitments and of each lender extending its commitment.

Outstanding borrowings under the Facility bear interest at either (a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin;

Outstanding borrowings under the Facility bear interest at either:

(a) the adjusted term SOFR (as described in the Facility) in effect from time to time plus the applicable margin;

or (b) the reference rate (as described in the Facility) plus the applicable margin.

The Facility also provides for customary fees, including commitment fees.

The pricing levels for the commitment fees and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time.

We may at any time prepay outstanding borrowings, in whole or in part, without premium or penalty.

At December 31, 2023 and 2022, no amount had been drawn under the Facility.

Index to Financial Statements

The pricing levels for the commitment fee and interest-rate margins are determined based on the ratings in effect for our senior unsecured long-term debt from time to time.

At December 31, 2024 and 2023, no amounts were drawn under the Facility or the previous revolving credit facility, respectively.

Phillips 66 also has a $ 5 billion uncommitted commercial paper program for short-term working capital needs that is supported by the Facility.

Commercial paper maturities are contractually limited to 365 days.

At December 31, 2023 and 2022, no borrowings were outstanding under the program.

Phillips 66 Partners

In connection with entering into the Facility, we terminated Phillips 66 Partners’ $ 750 million revolving credit facility.

Commercial paper maturities are contractually limited to less than one year.

At December 31, 2024, $ 435 million of commercial paper had been issued under this program.

At December 31, 2023, no borrowings were outstanding under this program.

DCP Midstream Class A Segment

DCP LP has a credit facility under its amended credit agreement (the Credit Agreement), with a borrowing capacity of up to $ 1.4 billion that matures on March 18, 2027.

The Credit Agreement grants DCP LP the option to increase the revolving loan commitment by an aggregate principal amount of up to $ 500 million and to extend the term for up to two additional one-year periods, subject to requisite lender approval.

Indebtedness under the Credit Agreement bears interest at either:

(a) an adjusted SOFR (as described in the Credit Agreement) plus the applicable margin;

or (b) the base rate (as described in the Credit Agreement) plus the applicable margin.

The Credit Agreement also provides for customary fees, including commitment fees.

The cost of borrowing under the Credit Agreement is determined by a ratings-based pricing grid based on DCP LP’s credit rating.

At December 31, 2023, DCP LP had $ 25 million in borrowings outstanding under the Credit Agreement.

At December 31, 2022, DCP LP had no borrowings outstanding under the Credit Agreement.

At December 31, 2023, and December 31, 2022, respectively, $ 2 million and $ 10 million in letters of credit had been issued that are supported by the Credit Agreement.

DCP LP has an accounts receivable securitization facility (the Securitization Facility) that provides for up to $ 350 million of borrowing capacity through August 2024 at an adjusted SOFR and includes an uncommitted option to increase the total commitments under the Securitization Facility by up to an additional $ 400 million.

Under the Securitization Facility, certain of DCP LP’s wholly owned subsidiaries sell or contribute receivables to another of DCP LP’s consolidated subsidiaries, DCP Receivables LLC, a bankruptcy-remote special purpose entity created for the sole purpose of the Securitization Facility.

At December 31, 2023, and December 31, 2022, respectively, $ 350 million and $ 40 million of borrowings were outstanding under the Securitization Facility, which are secured by accounts receivable at DCP Receivables LLC.

After our consolidation of DCP Midstream Class A Segment on August 17, 2022, DCP LP repaid $ 470 million of borrowing under its accounts receivable securitization and revolving credit facilities that were outstanding on the acquisition date.

On March 15, 2024, DCP LP terminated its $ 1.4 billion credit facility and its accounts receivable securitization facility that previously provided for up to $ 350 million of borrowing capacity.

At December 31, 2023, DCP LP had $ 25 million in borrowings outstanding under its $ 1.4 billion credit facility and $ 350 million of borrowings outstanding under its accounts receivable securitization facility, both of which were repaid during the three months ended March 31, 2024.

Total Committed Capacity Available

At December 31, 2023, and 2022, we had approximately $ 6.4 billion and $ 6.7 billion, respectively, of total committed capacity available under the credit facilities described above.

Index to Financial Statements

At December 31, 2024, and 2023, we had $ 4.6 billion and $ 6.4 billion, respectively, of total committed capacity available under the credit facilities described above.

Note 16— Guarantees

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See Note 9—Investments, Loans and Long-Term Receivables, for additional information regarding Dakota Access and the CECU.

At December 31, 2023, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to two years .

At December 31, 2024, we also had other guarantees outstanding primarily for our portion of certain joint venture debt, which have remaining terms of up to five years .

The maximum potential future exposures under these guarantees were approximately $ 189 million.

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For additional information about environmental liabilities, see Note 13—Asset Retirement Obligations and Accrued Environmental Costs and Note 17—Contingencies and Commitments.

Additionally, P66 Receivables has guaranteed all borrowings and receivables sold under our Receivables Securitization Facility.

See Note 15—Debt for information regarding the guarantee under our Receivables Securitization Facility.

Indemnification and Release Agreement

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The agreement also establishes procedures for handling claims subject to indemnification and related matters.

Index to Financial Statements

Note 17— Contingencies and Commitments

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See Note 24—Income Taxes, for additional information about income-tax-related contingencies.

Based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements.

Other than with respect to the legal matters described herein, based on currently available information, we believe it is remote that future costs related to known contingent liability exposures will exceed current accruals by an amount that would have a material adverse impact on our consolidated financial statements.

As we learn new facts concerning contingencies, we reassess our position both with respect to accrued liabilities and other potential exposures.

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See Note 13—Asset Retirement Obligations and Accrued Environmental Costs, for a summary of our accrued environmental liabilities.

Index to Financial Statements

Legal Proceedings

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Based on professional judgment and experience in using these litigation management tools and available information about current developments in all our cases, our legal organization regularly assesses the adequacy of current accruals and determines if adjustment of existing accruals, or establishment of new accruals, is required.

Propel Fuels Litigation

In late 2017, as part of Phillips 66 Company’s evaluation of various opportunities in the renewable fuels business, Phillips 66 Company engaged with Propel Fuels, Inc.

(Propel Fuels), a California company that distributes E85 and other alternative fuels through fueling kiosks.

Ultimately, the parties were not able to reach an agreement and negotiations were terminated in August 2018.

On February 17, 2022, Propel Fuels filed a lawsuit in the Superior Court of California, County of Alameda (the Propel Court), alleging that Phillips 66 Company misappropriated trade secrets related to Propel Fuels’ renewable fuels business during and after due diligence.

On October 16, 2024, a jury returned a verdict against Phillips 66 Company for $ 604.9 million in compensatory damages and issued a willfulness finding.

In 2025, the Propel Court is expected to rule on motions anticipated to be filed by Propel Fuels seeking exemplary damages and attorneys’ fees.

Propel Fuels has asked the Propel Court to grant treble damages and Phillips 66 Company has filed a brief in opposition to that request.

Also in 2025, the Propel Court is expected to rule on Phillips 66 Company’s motions for a judgment in its favor as a matter of law, or in the alternative to reduce the jury’s verdict or to grant a new trial.

Phillips 66 Company denies any wrongdoing and intends to vigorously defend its position.

As a result of the jury verdict, the Company has recorded an accrual of $ 604.9 million which is included in the “Selling, general and administrative expenses” line on our consolidated statement of income for the year ended December 31, 2024, and is reported in the M&S segment.

In addition, the accrued amount is reflected as “Other liabilities and deferred credits” on our consolidated balance sheet as of December 31, 2024.

However, it is reasonably possible that the estimate of the loss could change based on the progression of the case, including the appeals process.

Because of the uncertainties associated with ongoing litigation, we are unable to estimate the range of reasonably possible loss that may be attributable to exemplary damages, if any, in excess of the amount accrued.

If information were to become available that would allow us to reasonably estimate a range of potential exposure in an amount higher or lower than the amount already accrued, we would adjust our accrued liabilities accordingly.

While Phillips 66 Company believes the jury verdict is not legally or factually supported and intends to pursue post-judgment remedies and file an appeal, there can be no assurances that such defense efforts will be successful.

To the extent Phillips 66 Company is required to pay exemplary damages, it may have a material adverse effect on our financial position and results of operations.

Other Contingencies

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The agreements typically provide for crude oil transportation to be used in the ordinary course of our business.

At December 31, 2023, the estimated aggregate future payments under these agreements were $ 319 million per year for each year from 2024 through 2028 and $ 692 million in aggregate for all years after 2028.

At December 31, 2024, the estimated aggregate future payments under these agreements were on average $ 315 million per year for each year from 2025 through 2029 and $ 369 million in aggregate for all years after 2029.

For the years ended December 31, 2024, 2023 and 2022, total payments under these agreements were $ 319 million, $ 319 million and $ 323 million, respectively.

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Gains and losses from derivative contracts held for trading not directly related to our physical business are reported net in the “Other income” line item on our consolidated statement of income.

Unrealized gains on the foreign currency derivative entered into in connection with the sale of our 49 % ownership interest in Coop are reported in the “Net gain on dispositions” line item on our consolidated statement of income.

Cash flows from all our derivative activity for the periods presented appear in the operating section on our consolidated statement of cash flows.

Purchase and sales contracts with firm minimum notional volumes for commodities that are readily convertible to cash are recorded on our consolidated balance sheet as derivatives unless the contracts are eligible for, and we elect, the normal purchases and normal sales exception, whereby the contracts are recorded on an accrual basis.

We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business.

We generally apply the normal purchases and normal sales exception to eligible crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks, and power commodity contracts to purchase or sell quantities we expect to use or sell in the normal course of business.

All other derivative instruments are recorded at fair value on our consolidated balance sheet.

For further information on the fair value of derivatives, see Note 19—Fair Value Measurements.

Commodity Derivative Contracts —We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstock, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities.

Commodity Derivative Contracts —We sell into or receive supply from the worldwide crude oil, refined petroleum product, NGL, natural gas, renewable feedstocks and renewable fuels, and electric power markets, exposing our revenues, purchases, cost of operating activities and cash flows to fluctuations in the prices for these commodities.

Generally, our policy is to remain exposed to the market prices of commodities;

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We also use the market knowledge gained from these activities to capture market opportunities such as moving physical commodities to more profitable locations, storing commodities to capture seasonal or time premiums, and blending commodities to capture quality upgrades.

Index to Financial Statements

DCP Midstream Class A Segment

Through DCP LP’s operations, DCP Midstream Class A Segment is exposed to a variety of risks including but not limited to changes in the prices of commodities that DCP LP buys or sells.

The information below includes DCP LP’s financial instruments from the effective date of the DCP Midstream Merger.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for additional information regarding the DCP Midstream Merger and the associated accounting treatment.

The following table indicates the consolidated balance sheet line items that include the fair values of commodity derivative assets and liabilities.

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Total $ 2,217 ( 2,219 ) 62 60 3,201 ( 3,148 ) 18 71

At December 31, 2023, there was $ 7 million of net collateral received that was not offset on our consolidated balance sheet.

At December 31, 2022, there was $ 93 million of collateral paid that was not offset on our consolidated balance sheet.

At December 31, 2024, and 2023, there was no material cash collateral received or paid that was not offset on our consolidated balance sheet.

The realized and unrealized gains (losses) incurred from commodity derivatives, and the line items where they appear on our consolidated statement of income, were:

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The percentage of our derivative contract volumes expiring within the next 12 months was more than 90 % at December 31, 2024 and 2023.

Index to Financial Statements

Open Position

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Fair value measured with unobservable inputs that are significant to the measurement.

Index to Financial Statements

We classify the fair value of an asset or liability based on the significance of its observable or unobservable inputs to the measurement.

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When applicable, we determine the fair value of interest rate swaps based on observable market valuations for interest rate swaps that have notional amounts, terms and pay and reset frequencies similar to ours.

When applicable, we determine the fair value of foreign currency derivatives based on observable market data and classify the resulting fair values as Level 2.

• Rabbi trust assets —These deferred compensation investments are measured at fair value using unadjusted quoted prices available from national securities exchanges and are therefore categorized as Level 1 in the fair value hierarchy.

• Investment in NOVONIX —Our investment in NOVONIX is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

• Investment in NOVONIX —At December 31, 2024, our investment in NOVONIX was 13.75 %, which is measured at fair value using unadjusted quoted prices available from the Australian Securities Exchange and is therefore categorized as Level 1 in the fair value hierarchy.

• Other investments —Includes other marketable securities with observable market prices.

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The following tables also reflect the effect of netting derivative assets and liabilities with the same counterparty for which we have the legal right of offset and collateral netting.

Index to Financial Statements

The carrying values and fair values by hierarchy of our financial assets and liabilities, either carried or disclosed at fair value, including any effects of counterparty and collateral netting, were:

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Investment in NOVONIX 36 — — 36 N/A N/A — 36

Foreign currency derivative — 67 — 67 N/A N/A — 67

$ 2,326 144 3 2,473 ( 2,118 ) — — 355

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Investment in NOVONIX 39 — — 39 N/A N/A — 39

Other investments 42 1 — 43 N/A N/A — 43

$ 3,269 125 1 3,395 ( 3,041 ) — — 354

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Exchange-cleared instruments $ 3,057 41 — 3,098 ( 3,039 ) ( 18 ) — 41

OTC instruments — 9 — 9 — — — 9

Physical forward contracts — 50 — 50 ( 2 ) — — 48

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$ 3,057 18,724 — 21,781 ( 3,041 ) ( 18 ) 408 19,130

The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet.

The rabbi trust assets and investment in NOVONIX are recorded in the “Investments and long-term receivables” line item, the foreign currency derivative is recorded in the “Prepaid expenses and other current assets” line item, and floating-rate and fixed-rate debt are recorded in the “Short-term debt” and “Long-term debt” line items on our consolidated balance sheet.

See Note 18—Derivatives and Financial Instruments, for information regarding where the assets and liabilities related to our commodity derivatives are recorded on our consolidated balance sheet.

Index to Financial Statements

Nonrecurring Fair Value Measurements

Equity Investments

In the first quarter of 2021, Phillips 66 Partners wrote down the book value of its investment in Liberty to estimated fair value using a Level 3 nonrecurring fair value measurement.

This nonrecurring measurement was based on the estimated fair value of Phillips 66 Partners’ share of the joint venture’s pipeline assets and net working capital at March 31, 2021.

See Note 8—Investments, Loans and Long-Term Receivables, for more information regarding Phillips 66 Partners’ transfer of its ownership in Liberty to its co-venturer in April 2021.

PP&E and Intangible Assets

Alliance Refinery

In the third quarter of 2021, we remeasured the carrying value of the net PP&E of our Alliance Refinery asset group to fair value.

The fair value of PP&E was determined using a combination of the income, cost and sales comparison approaches.

The income approach used a discounted cash flow model that required various observable and non-observable inputs, such as commodity prices, margins, operating rates, sales volumes, operating expenses, capital expenditures, terminal-year values and a risk-adjusted discount rate.

The cost approach used assumptions for the current replacement costs of similar plant and equipment assets adjusted for estimated physical deterioration, functional obsolescence and economic obsolescence.

The sales comparison approach used the value of similar properties recently sold or currently offered for sale.

This valuation resulted in a Level 3 nonrecurring fair value measurement.

Equity Investments and PP&E

In the fourth quarter of 2024, we remeasured the carrying value of an equity method investment in a crude pipeline in Oklahoma to fair value.

Fair value was determined using an income approach.

The valuation resulted in a Level 3 nonrecurring fair value measurement.

In the second and third quarters of 2024, we remeasured the carrying value of the net PP&E and equity method investment in certain crude gathering, and gathering and processing asset groups in Texas to fair value.

Fair value was determined using a market approach.

These valuations resulted in Level 3 nonrecurring fair value measurements.

In the first quarter of 2024, we remeasured the carrying value of the net PP&E of certain crude oil processing and logistics assets in California to fair value.

Fair value was determined using a market approach.

These valuations resulted in Level 3 nonrecurring fair value measurements.

See Note 12—Impairments, for additional information regarding before-tax impairments recorded in 2024.

DCP Midstream Merger

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These valuations resulted in Level 2 nonrecurring fair value measurements.

Index to Financial Statements

Noncontrolling Interests

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In connection with the DCP Midstream Merger, we recognized before-tax gains totaling $ 2,831 million from remeasuring our previously held equity investments to their fair values and a before-tax gain of $ 182 million related to the transfer of a 35.75 % indirect economic interest in Gray Oak Pipeline to our co-venturer.

The fair values of our previously held equity interest in DCP Midstream and the equity interest in Gray Oak Pipeline we transferred were primarily based on DCP LP’s publicly traded common unit market price on the effective date of the merger, August 17, 2022, the cash consideration contributed and obligations that were deemed to be effectively settled.

The fair values of our previously held equity interest in DCP Midstream and the equity interest in Gray Oak Pipeline we transferred were primarily based on DCP LP’s publicly traded common unit market price on the effective date of the DCP Midstream Merger, August 17, 2022, the cash consideration contributed and obligations that were deemed to be effectively settled.

This valuation resulted in Level 1 nonrecurring fair value measurements.

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These valuations resulted in Level 3 nonrecurring fair value measurements.

Index to Financial Statements

Note 20— Equity

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Noncontrolling Interests

At December 31, 2023, our noncontrolling interests primarily represented Enbridge’s indirect economic interest in DCP LP.

At December 31, 2024 and 2023, our noncontrolling interests primarily represented Enbridge’s indirect economic interest in DCP LP.

On June 15, 2023, as part of the DCP LP Merger, we acquired all publicly held common units of DCP LP and eliminated the public common unit noncontrolling interest in our consolidated financial statements from the DCP LP Merger date, forward.

During 2023, DCP LP also redeemed its Series B and Series C preferred units.

See Note 29—DCP Midstream Class A Segment, for further information on the DCP LP Merger and preferred unit redemptions.

At December 31, 2022, our noncontrolling interests primarily represented Enbridge’s indirect economic interest in DCP LP, the public holders of DCP LP’s common units and the holders of DCP LP’s Series B and Series C preferred units.

In December 2022, DCP LP redeemed its Series A preferred units.

In March 2022, we completed a merger between us and Phillips 66 Partners, which resulted in the acquisition of all limited partnership interests in Phillips 66 Partners not already owned by us.

See Note 29—DCP Midstream Class A Segment, for further information on the preferred unit redemption.

See Note 30—Phillips 66 Partners LP, for further information on the merger with Phillips 66 Partners.

Index to Financial Statements

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for further information on the DCP LP Merger and preferred unit redemptions.

Note 21— Leases

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We discount lease obligations using our incremental borrowing rate.

We separate costs for lease and service components for contracts involving marine vessels and consignment service stations.

We separate costs for lease and service components for contracts involving marine vessels, consignment service stations, and refining processing equipment.

For these contracts, we allocate the consideration payable between the lease and service components using the relative standalone prices of each component.

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Right-of-Use Assets

Prepaid expenses and other current assets $ — 20 — —

Net properties, plants and equipment 323 — 298 —

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Total lease liabilities $ 352 1,355 305 1,152

Index to Financial Statements

Future minimum lease payments at December 31, 2024, for finance and operating lease liabilities were:

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Total lease liabilities $ 352 1,355

Our finance lease liabilities relate primarily to service station consignment agreements with a marketing joint venture and a crude oil terminal in the United Kingdom.

Our finance lease liabilities relate primarily to our marketing business, service station consignment agreements with a marketing joint venture, and a crude oil terminal in the United Kingdom.

The lease liability for the terminal finance lease is subject to foreign currency translation adjustments each reporting period.

Components of net lease cost for the years ended December 31, 2023, 2022 and 2021, were:

Components of net lease cost for the years ended December 31 were:

Millions of Dollars

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Total net lease cost $ 646 548 489

Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31, 2023, 2022 and 2021, was:

Cash paid for amounts included in the measurement of our lease liabilities for the years ended December 31 was:

Millions of Dollars

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During the years ended December 31, 2024, 2023 and 2022, we recorded noncash ROU assets and corresponding operating lease liabilities totaling $ 547 million, $ 398 million and $ 269 million, respectively, related to new and modified lease agreements.

Index to Financial Statements

At December 31, 2023 and 2022, the weighted-average remaining lease terms and discount rates for our lease liabilities were:

The weighted-average remaining lease terms and discount rates for our lease liabilities at December 31 were:

Weighted-average remaining lease term—finance leases (years) 13.0 13.4

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Benefits paid ( 209 ) ( 34 ) ( 233 ) ( 33 ) ( 22 ) ( 26 )

Settlements — — — ( 101 ) — —

Foreign currency exchange rate change — ( 22 ) — 34 — —

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Benefits paid ( 209 ) ( 34 ) ( 233 ) ( 33 ) ( 22 ) ( 26 )

Settlements — — — ( 101 ) — —

Foreign currency exchange rate change — ( 15 ) — 38 — —

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Funded Status at December 31 $ ( 228 ) 54 ( 121 ) 26 ( 137 ) ( 150 )

Index to Financial Statements

Amounts recognized in the consolidated balance sheet for our pension and other postretirement benefit plans at December 31 include:

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Unrecognized net actuarial loss (gain) $ 141 ( 16 ) 111 2 ( 54 ) ( 51 )

$ 111 2 159 ( 27 ) ( 51 ) ( 59 )

Unrecognized prior service credit

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):

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19 — 28 ( 3 ) ( 5 ) ( 6 )

Amortization of prior service credit — — — ( 1 ) — ( 2 )

Total recognized in other comprehensive income $ ( 30 ) 18 48 ( 29 ) 3 ( 8 )

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and international pension plans were $ 2,218 million and $ 609 million, respectively, at December 31, 2024, and $ 2,101 million and $ 661 million, respectively, at December 31, 2023.

Index to Financial Statements

Information for U.S.

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Fair value of plan assets

— 13 1,778 13

Information for U.S.

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12 — 11 ( 3 ) 21 12 ( 5 ) ( 6 ) ( 2 )

17 — 53 9 55 — — — —

Settlement losses 7 — 17 — 53 9 — — —

Net periodic benefit cost (credit)* $ 96 1 128 ( 2 ) 162 13 5 5 5

* Included in the “Operating expenses” and “Selling, general and administrative expenses” line items on our consolidated statement of income.

Index to Financial Statements

In determining net periodic benefit cost, we amortize prior service costs on a straight-line basis over the average remaining service period of employees expected to receive benefits under the plan.

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For the year ended December 31, 2024, actuarial losses resulted in increases in our U.S.

and international pension benefit obligations of $ 58 million and $ 30 million, respectively.

For the year ended December 31, 2022, actuarial gains resulted in decreases in our U.S.

pension benefit obligations of $ 68 million and actuarial gains resulted in a decrease in our international pension benefit obligation of $ 48 million.

For the year ended December 31, 2023, actuarial losses resulted in increases in our U.S.

and international pension benefit obligations of $ 58 million and $ 30 million, respectively.

The primary driver for the actuarial losses in 2023 was decreases in the discount rates.

The primary driver for the actuarial losses in 2024 was changes in demographic experience.

The primary driver for the actuarial gains in 2024 was increases in the discount rates.

The primary driver for the actuarial losses in 2023 was decreases in the discount rates.

For the year ended December 31, 2024, the weighted-average actual return on plan assets was 7 %, which resulted in an increase in our U.S.

and international plan assets of $ 172 million and $ 14 million, respectively.

For the year ended December 31, 2022, the weighted-average actual return on plan assets was negative 20 %, which resulted in a decrease in our U.S.

For the year ended December 31, 2023, the weighted-average actual return on plan assets was 10 %, which resulted in an increase in our U.S.

and international plan assets of $ 203 million and $ 44 million, respectively.

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The measurement of the accumulated benefit obligation assumes a health care cost trend rate of 6.75 % in 2025 that declines to 5 % by 2032.

Index to Financial Statements

The investment strategy for managing pension plan assets is to seek a reasonable rate of return relative to an appropriate level of risk and provide adequate liquidity for benefit payments and portfolio management.

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Total $ 656 109 — 2,121 21 — 190 751

Index to Financial Statements

Millions of Dollars

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Total $ 714 101 — 2,139 4 — 13 778

The following table is a reconciliation of the changes in our Level 3 plan asset balance:

Millions of Dollars

Balance at January 1 $ 13 13

Transfer in 186 —

Actual return on plan assets ( 6 ) —

Foreign currency exchange rate change ( 3 ) —

Balance at December 31 $ 190 13

Our funding policy for U.S.

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Employees can contribute up to 75 % of their eligible pay, subject to certain statutory limits, in the Savings Plan to a choice of investment funds.

For the years ended December 31, 2023 and 2022, Phillips 66 provided a company match of participant contributions up to 8 % of eligible pay, with an additional Success Share contribution ranging from 0 % to 4 % of eligible pay based on management discretion.

For the year ended December 31, 2021, Phillips 66 provided a company match of participant contributions up to 6 % of eligible pay, with an additional Success Share contribution ranging from 0 % to 6 % of eligible pay based on management discretion.

For the years ended December 31, 2024, 2023, and 2022, Phillips 66 provided a company match of participant contributions up to 8 % of eligible pay.

For the years ended December 31, 2023 and 2022, Phillips 66 provided an additional Success Share contribution ranging from 0 % to 4 % of eligible pay based on management discretion.

For the years ended December 31, 2024, 2023 and 2022, we recorded expense of $ 155 million, $ 196 million and $ 210 million, respectively, related to our contributions to the Savings Plan.

Index to Financial Statements

Note 23— Share-Based Compensation Plans

Share-based payment awards, including stock options, stock appreciation rights, stock awards (including restricted stock and RSU awards), cash awards, and performance awards, are granted to our employees, nonemployee directors and other plan participants by the Human Resources and Compensation Committee (HRCC) of our Board of Directors under the applicable Omnibus Stock and Performance Incentive Plan of Phillips 66.

Share-based payment awards, including stock options, stock appreciation rights, stock awards (including restricted stock and Restricted Stock Unit (RSU) awards), cash awards, and performance awards, are granted to our employees, nonemployee directors and other plan participants by the Human Resources and Compensation Committee (HRCC) of our Board of Directors under the applicable Omnibus Stock and Performance Incentive Plan of Phillips 66.

Prior to May 11, 2022, share-based payment awards were granted under the 2013 Omnibus Stock and Performance Incentive Plan of Phillips 66 (the 2013 P66 Omnibus Plan).

10 unchanged sentences

Income tax benefit $ ( 84 ) ( 87 ) ( 55 )

Index to Financial Statements

Restricted Stock Units

Generally, RSUs are granted annually under the provisions of the applicable Phillips 66 incentive plan, and vest either ratably over three years following the grant date or cliff vest at the end of three years for awards granted in 2023.

For awards granted prior to 2023, RSUs cliff vest at the end of three years .

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The recipients receive a quarterly dividend equivalent cash payment until the RSU is settled by issuing one share of our common stock for each RSU at the end of the service period.

RSUs granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date for RSUs granted in 2023 and six months after the grant date for RSUs granted prior to 2023.

RSUs granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date for RSUs granted in 2024 and 2023, and six months after the grant date for RSUs granted prior to 2023.

Special RSUs are granted to attract or retain key personnel and the terms and conditions may vary by award.

23 unchanged sentences

Dividend equivalents are paid on these awards.

Index to Financial Statements

The following table summarizes our PSU activity from January 1, 2024, to December 31, 2024:

8 unchanged sentences

Outstanding at December 31, 2024 432,093 $ 37.75

Not Vested at December 31, 2023 — $ —

At December 31, 2024, there was no remaining unrecognized compensation cost from unvested PSU awards.

6 unchanged sentences

Options granted to retirement-eligible employees are not subject to forfeiture ten months after the grant date for options granted in 2023 and six months after the grant date for options granted prior to 2023.

No options were granted in 2024.

The following table summarizes our stock option activity from January 1, 2024, to December 31, 2024:

11 unchanged sentences

Exercisable at December 31, 2024 3,220,753 $ 87.62 $ 147

Index to Financial Statements

The weighted-average remaining contractual terms of vested options and exercisable options at December 31, 2023, were 6.37 years and 5.6 years, respectively.

The weighted-average remaining contractual terms of vested options and exercisable options at December 31, 2024, were 5.75 and 5.35 years, respectively.

During 2024, we received $ 86 million in cash and realized an income tax benefit of $ 16 million from the exercise of options.

2 unchanged sentences

During 2023 and 2022, employees exercised options with an aggregate intrinsic value of $ 52 million and $ 42 million, respectively.

The following table provides the significant assumptions used to calculate the grant-date fair values of options granted over the years shown below, as calculated using the Black-Scholes-Merton option-pricing model:

2023 2022 2021

The following table provides the significant assumptions used to calculate the grant-date fair values of options granted in 2023 and 2022, as calculated using the Black-Scholes-Merton option-pricing model:

Risk-free interest rate 3.84 % 1.97

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Expected life (years) 6.78 6.61

No options were granted in 2024.

We calculate the volatility factor using historical Phillips 66 end-of-week closing stock prices.

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Share-based compensation expense recognized for DCP Midstream Class A Segment’s share-based payment awards totaled $ 23 million for the period from August 18, 2022, through December 31, 2022, and $ 6 million for the period from January 1, 2023, through June 14, 2023.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers and Note 4—Business Combinations for additional information regarding the merger and associated accounting treatment.

Index to Financial Statements

See Note 4—Restructuring and Note 5—Business Combinations, for additional information regarding the DCP Midstream Merger and associated accounting treatment.

Note 24— Income Taxes

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corporate income tax system, including a 15% minimum tax based on adjusted financial statement income as defined in the IRA, which was effective after December 31, 2022.

We do not owe corporate alternative minimum tax in 2023 as the regular U.S.

tax liability exceeds the corporate alternative minimum tax.

We did not owe corporate alternative minimum tax in 2024 or 2023 as the regular U.S.

tax liability exceeded the corporate alternative minimum tax.

The IRA also included provisions that allow a company to purchase transferable tax credits.

In 2023, we executed agreements to purchase eligible tax credits for a total of $ 262 million.

In 2023, we paid $ 196 million to our counterparties and the remainder will be paid in 2024.

These tax credits were used to offset estimated tax payments in 2023.

In 2024 and 2023, we executed agreements to purchase eligible tax credits for a total of $ 485 million and $ 262 million, respectively.

In 2024 and 2023, we paid $ 551 million and $ 196 million to our counterparties, respectively.

These tax credits were used to offset estimated tax payments in 2024 and 2023.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

18 unchanged sentences

Net deferred tax liabilities $ 7,035 7,300

Index to Financial Statements

At December 31, 2024, the loss and credit carryforward deferred tax assets were primarily related to a foreign tax credit carryforward in the United States of $ 128 million;

14 unchanged sentences

Determination of the unrecognized deferred income tax liability related to this temporary difference is not practicable given the variables involved in performing such a calculation.

During the fourth quarter of 2024, we entered into a definitive agreement to sell our ownership interest in Coop.

In connection with the anticipated sale, we recorded a U.S.

deferred tax liability of $ 36 million for the excess of book over tax basis in this investment.

The sale of Coop closed in January 2025.

See Note 9—Investments, Loans and Long-Term Receivables, for additional information.

We file tax returns in the U.S.

10 unchanged sentences

Included in the balance of unrecognized income tax benefits at December 31, 2024, 2023 and 2022, were $ 87 million, $ 100 million and $ 37 million, respectively, which, if recognized, would affect our effective income tax rate.

With respect to various unrecognized income tax benefits and the related accrued liabilities, we expect $ 28 million to be recognized or paid within the next twelve months.

With respect to various unrecognized income tax benefits and the related accrued liabilities, we do not expect any to be recognized or paid within the next twelve months.

At December 31, 2024, 2023 and 2022, accrued liabilities for interest and penalties, net of accrued income taxes, totaled $ 1 million, $ 8 million and $ 7 million, respectively.

These accruals decreased our results for each of the years ended December 31, 2023, 2022 and 2021 by $ 1 million, $ 3 million and $ 3 million, respectively.

Index to Financial Statements

These accruals increased our results for the year ended December 31, 2024, by $ 7 million and decreased our results for the years ended December 31, 2023 and 2022, by $ 1 million and $ 3 million, respectively.

Audits in significant jurisdictions are generally complete as follows:

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Tax law changes — — ( 25 ) — — ( 0.2 )

Discount on purchased credits ( 36 ) ( 15 ) ( 4 ) ( 1.3 ) ( 0.2 ) —

Tax on outside basis difference in foreign investment

36 — — 1.3 — —

Other* 27 59 ( 31 ) 1.0 0.6 ( 0.2 )

$ 500 2,230 3,248 18.7 % 23.6 22.2

* Other includes individually immaterial items but is primarily attributable to foreign operations and change in valuation allowance.

For the year ended December 31, 2021, state income tax, net of federal income tax benefit, includes a $ 58 million benefit, primarily to reflect the impact of updated apportionment factors.

For the years ended December 31, 2023 and 2022, income tax benefits of $ 113 million and $ 323 million, respectively, are reflected in “Capital in Excess of Par” on the consolidated statement of changes in equity.

There is no income tax reflected in “Capital in Excess of Par” for the year ended December 31, 2021.

Index to Financial Statements

* “Other” is primarily attributable to foreign operations.

For the years ended December 31, 2024, 2023 and 2022, income tax benefits of $ 14 million, $ 113 million and $ 323 million, respectively, are reflected in “Capital in Excess of Par” on the consolidated statement of changes in equity.

Note 25— Accumulated Other Comprehensive Loss

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December 31, 2023 ( 120 ) ( 157 ) ( 5 ) ( 282 )

Other comprehensive income (loss) before reclassifications ( 12 ) 179 ( 3 ) 164

Other comprehensive loss before reclassifications ( 31 ) ( 105 ) — ( 136 )

Amounts reclassified from accumulated other comprehensive loss

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Hedging — — — —

Net current period other comprehensive income (loss) 2 179 ( 3 ) 178

Net current period other comprehensive loss ( 20 ) ( 105 ) — ( 125 )

December 31, 2024 $ ( 140 ) ( 262 ) ( 5 ) ( 407 )

1 unchanged sentence

See Note 22—Pension and Postretirement Plans, for additional information.

Index to Financial Statements

Note 26— Cash Flow Information

In the third quarter of 2024, we began presenting the line item “Capital expenditures and investments” on our consolidated statement of cash flows exclusive of acquisitions, net of cash acquired.

Prior period information has been reclassified for comparability.

Supplemental Cash Flow Information

4 unchanged sentences

Income taxes* 1,186 1,397 2,071

* 2023 includes $ 196 million of cash paid to counterparties to purchase IRA eligible tax credits.

2021 reflects a net cash refund position.

Cash payments for income taxes were $ 110 million in 2021.

* 2024 and 2023 include $ 551 million and $ 196 million of cash paid to counterparties to purchase IRA eligible tax credits.

Millions of Dollars

2024 2023 2022

Non-cash investing activities

Derecognition of government obligations $ 1,100 — —

Reduction of WRB investment balance 290 — —

Non-cash financing activities

Derecognition of Discharged Notes $ ( 1,100 ) — —

Distribution of Advance Term Loan from WRB ( 290 ) — —

See Note 15—Debt, for additional information regarding the above non-cash activities.

Note 27— Other Financial Information

19 unchanged sentences

Marketing and Specialties 3 2 ( 2 )

Renewable Fuels 2 3 ( 8 )

Corporate and Other 6 ( 2 ) 8

Index to Financial Statements

$ 11 22 ( 9 )

Note 28— Related Party Transactions

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Operating expenses and selling, general and administrative expenses (c) 299 295 281

(a) We sold NGL, other petrochemical feedstocks and solvents to CPChem, NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the M&S segment, including OnCue and CF United.

(a) We sold NGL, other petrochemical feedstocks and solvents to Chevron Phillips Chemical Company LLC (CPChem), NGL and certain feedstocks to DCP Midstream, gas oil and hydrogen feedstocks to Excel Paralubes LLC (Excel Paralubes), and refined petroleum products to several of our equity affiliates in the M&S segment, including OnCue and CF United.

We also sold certain feedstocks and intermediate products to WRB and acted as an agent for WRB in supplying crude oil and other feedstocks for a fee.

8 unchanged sentences

As such, transactions with these parties after August 17, 2022, are not presented in the table above.

Index to Financial Statements

Note 29— Segment Disclosures and Related Information

Effective April 1, 2024, we changed the internal financial information reviewed by our chief executive officer to evaluate performance and allocate resources to our operating segments.

This resulted in changes to the composition of our operating segments, as well as measurement changes for certain activities between our operating segments.

The primary effects are summarized below.

Prior period information has been recast for comparability.

• Establishment of a Renewable Fuels operating segment, which includes renewable fuels activities and assets historically reported in our Refining, M&S and Midstream operating segments.

• Change in method of allocating results for certain Gulf Coast distillate export activities from our M&S operating segment to our Refining operating segment.

• Reclassification of certain crude oil and international clean products trading activities between our M&S operating segment and our Refining operating segment.

• Change in reporting of our investment in NOVONIX from our Midstream operating segment to Corporate and Other.

Our operating segments are:

1) Midstream— Provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and NGL transportation, storage, fractionation, gathering, processing and marketing services, mainly in the United States.

As a result of the DCP Midstream Merger on August 17, 2022, we began consolidating DCP Midstream Class A Segment, as well as DCP Sand Hills and DCP Southern Hills.

See Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers.

This segment also includes our 16 % investment in NOVONIX.

In addition, this segment exports liquefied petroleum gas to global markets.

2) Chemicals— Consists of our 50 % equity investment in CPChem, which manufactures and markets petrochemicals and plastics on a worldwide basis.

3) Refining— Refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels.

3) Refining— Refines crude oil and other feedstocks into petroleum products, such as gasoline and distillates, including aviation fuels.

This segment includes 11 refineries in the United States and Europe.

4) Marketing and Specialties— Purchases for resale and markets refined petroleum products and renewable fuels, mainly in the United States and Europe.

4) Marketing and Specialties— Purchases for resale and markets refined products, mainly in the United States and Europe.

In addition, this segment includes the manufacturing and marketing of base oils and lubricants.

Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies and various other corporate activities.

Corporate assets include all cash, cash equivalents and income tax-related assets.

Corporate and Other also includes restructuring costs related to our business transformation.

5) Renewable Fuels— Processes renewable feedstocks into renewable products at the Rodeo Complex and at our Humber Refinery.

In addition, this segment includes the global activities to procure renewable feedstocks, manage certain regulatory credits, and market renewable fuels.

Corporate and Other includes general corporate overhead, interest income, interest expense, our investment in research of new technologies, business transformation restructuring costs, our investment in NOVONIX, and various other corporate activities.

Corporate assets include all cash, cash equivalents, income tax-related assets and enterprise information technology assets.

See Note 4—Restructuring, for additional information regarding restructuring costs.

Intersegment sales are at prices that we believe approximate market.

Index to Financial Statements

Through our implementation of ASU No.

2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures,” we are including additional disclosures regarding significant segment expenses regularly provided to our chief operating decision maker (CODM), who is our Chief Executive Officer.

The measure of segment profit or loss reviewed by our CODM is “income (loss) before income taxes.” The CODM uses segment income (loss) before income taxes to allocate resources to each segment predominantly in the annual budgeting and forecasting process.

The CODM compares budget-to-actual segment income (loss) before income taxes on a monthly and quarterly basis and considers trend analyses as well as other market factors when making decisions about allocating capital and personnel to the segments.

The measure of segment assets reported on our consolidated balance sheet reviewed by our CODM is “Total Assets.”

Analysis of Results by Operating Segment

Millions of Dollars

Year Ended December 31, 2024

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Consolidating Adjustments Total Consolidated

Revenues and Other Income

Third-party sales and other operating revenues $ 16,012 — 34,793 90,318 1,995 35 — 143,153

Intercompany revenues 2,775 — 50,171 2,129 3,567 15 ( 58,657 ) —

Total sales and other operating revenues 18,787 — 84,964 92,447 5,562 50 ( 58,657 ) 143,153

Equity in earnings of affiliates 591 863 50 276 ( 1 ) — — 1,779

Net gain on dispositions 263 — ( 8 ) 66 — — — 321

Other income 11 — 3 42 10 186 ( 9 ) 243

Total Revenues and Other Income 19,652 863 85,009 92,831 5,571 236 ( 58,666 ) 145,496

Costs and Expenses

Purchased crude oil and products 13,429 — 79,850 89,572 5,664 — ( 58,553 ) 129,962

Operating expenses* 1,876 ( 3 ) 3,727 70 370 12 ( 113 ) 5,939

Selling, general and administrative expenses* 213 ( 10 ) 209 1,932 51 419 — 2,814

Depreciation and amortization 920 — 1,077 179 64 123 — 2,363

Impairments 346 — 106 3 — 1 — 456

Taxes other than income taxes 216 — 387 59 ( 382 ) 49 — 329

Interest and debt expense — — — — — 907 — 907

Other segment items **

14 — 18 5 2 12 — 51

Sales and Other Operating Revenues*

Total sales $ 18,605 19,121 11,714

Intersegment eliminations ( 2,825 ) ( 2,932 ) ( 2,901 )

Total Midstream 15,780 16,189 8,813

Chemicals — — 3

Total sales 96,011 112,725 75,096

Intersegment eliminations ( 59,846 ) ( 71,127 ) ( 46,122 )

Total Refining 36,165 41,598 28,974

Marketing and Specialties

Total sales 98,769 115,622 75,583

Intersegment eliminations ( 3,351 ) ( 3,453 ) ( 1,929 )

Total Marketing and Specialties 95,418 112,169 73,654

Corporate and Other 36 34 32

Consolidated sales and other operating revenues $ 147,399 169,990 111,476

* See Note 5—Sales and Other Operating Revenues, for further details on our disaggregated sales and other operating revenues.

Equity in Earnings (Losses) of Affiliates

Midstream $ 649 916 877

Chemicals 586 842 1,832

Refining 439 747 ( 184 )

Marketing and Specialties 343 463 379

Corporate and Other — — —

Consolidated equity in earnings of affiliates $ 2,017 2,968 2,904

Depreciation, Amortization and Impairments*

Midstream $ 926 569 634

Chemicals — — —

Refining 849 879 2,272

Marketing and Specialties 124 110 114

Corporate and Other 102 131 83

Consolidated depreciation, amortization and impairments $ 2,001 1,689 3,103

* See Note 11—Impairments, for further details on impairments by segment.

Index to Financial Statements

Total Costs and Expenses 17,014 ( 13 ) 85,374 91,820 5,769 1,523 ( 58,666 ) 142,821

Income (loss) before income taxes $ 2,638 876 ( 365 ) 1,011 ( 198 ) ( 1,287 ) — 2,675

* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.

** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement:

“Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

Millions of Dollars

2023 2022 2021

Interest Income and Expense

As of and for the Year Ended December 31, 2024

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Total Consolidated

Interest Income $ — — — — — 158 158

Corporate and Other $ 269 82 11

Investments In and Advances to Affiliates 3,080 7,819 2,381 719 16 2 14,017

Total Assets 28,334 7,842 19,599 9,799 3,142 3,866 72,582

Capital Expenditures and Investments 751 — 582 85 375 66 1,859

Millions of Dollars

Year Ended December 31, 2023

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Consolidating Adjustments Total Consolidated

Revenues and Other Income

Third-party sales and other operating revenues $ 15,780 — 34,241 95,931 1,412 35 — 147,399

Intercompany revenues 2,824 — 57,985 3,000 3,534 13 ( 67,356 ) —

Total sales and other operating revenues 18,604 — 92,226 98,931 4,946 48 ( 67,356 ) 147,399

Equity in earnings of affiliates 648 586 439 345 ( 1 ) — — 2,017

Net gain on dispositions 130 — ( 13 ) 3 ( 3 ) ( 2 ) — 115

Other income 5 — 86 ( 11 ) 8 259 12 359

Total Revenues and Other Income 19,387 586 92,738 99,268 4,950 305 ( 67,344 ) 149,890

Costs and Expenses

Purchased crude oil and products 13,126 — 81,726 95,808 4,667 — ( 67,241 ) 128,086

Operating expenses* 1,844 ( 3 ) 4,245 57 98 16 ( 103 ) 6,154

Selling, general and administrative expenses* 441 ( 11 ) 169 1,336 8 582 — 2,525

Depreciation and amortization 923 — 831 122 8 93 — 1,977

Impairments 3 — 10 3 — 8 — 24

Taxes other than income taxes 229 — 382 40 12 44 — 707

Interest and debt expense — — — — — 897 — 897

Corporate and Other $ 897 619 581

Other segment items **

2 — 35 5 4 5 — 51

Total Costs and Expenses 16,568 ( 14 ) 87,398 97,371 4,797 1,645 ( 67,344 ) 140,421

Income (loss) before income taxes $ 2,819 600 5,340 1,897 153 ( 1,340 ) — 9,469

Midstream $ 2,774 4,734 1,500

Chemicals 600 856 1,844

Refining 5,266 7,816 ( 2,353 )

Marketing and Specialties 2,135 2,402 1,723

Corporate and Other ( 1,306 ) ( 1,169 ) ( 974 )

Consolidated income before income taxes $ 9,469 14,639 1,740

* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.

** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement:

“Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

Millions of Dollars

As of and for the Year Ended December 31, 2023

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Total Consolidated

Interest Income $ — — — — — 269 269

Investments In and Advances to Affiliates 3,749 7,341 2,802 824 18 2 14,736

Midstream $ 3,766 4,271 3,978

Chemicals 7,341 6,785 6,369

Refining 2,802 2,484 2,340

Marketing and Specialties 825 883 750

Corporate and Other 2 2 2

Consolidated investments in and advances to affiliates $ 14,736 14,425 13,439

Midstream $ 29,107 30,273 15,546

Chemicals 7,357 6,785 6,453

Refining 22,432 21,581 20,338

Marketing and Specialties 11,411 9,939 8,505

Corporate and Other 5,194 7,864 4,752

Consolidated total assets $ 75,501 76,442 55,594

Index to Financial Statements

Total Assets 29,052 7,357 21,013 10,834 2,012 5,233 75,501

Capital Expenditures and Investments 625 — 586 101 753 90 2,155

Millions of Dollars

Year Ended December 31, 2022

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Consolidating Adjustments Total Consolidated

Revenues and Other Income

Third-party sales and other operating revenues $ 16,189 — 40,234 112,569 963 35 — 169,990

Intercompany revenues 2,932 — 69,807 2,144 2,475 9 ( 77,367 ) —

Total sales and other operating revenues 19,121 — 110,041 114,713 3,438 44 ( 77,367 ) 169,990

Equity in earnings of affiliates 914 842 747 464 1 — — 2,968

Net gain on dispositions ( 1 ) — 1 — — 7 — 7

Other income 3,009 — 43 35 ( 4 ) ( 367 ) 21 2,737

Total Revenues and Other Income 23,043 842 110,832 115,212 3,435 ( 316 ) ( 77,346 ) 175,702

Costs and Expenses

Purchased crude oil and products 15,496 — 96,808 111,638 3,222 — ( 77,232 ) 149,932

Operating expenses* 1,401 ( 9 ) 4,731 50 37 15 ( 114 ) 6,111

Selling, general and administrative expenses* 255 ( 5 ) 151 1,304 5 458 — 2,168

Depreciation and amortization 567 — 860 110 7 85 — 1,629

Impairments 1 — 13 — — 46 — 60

Taxes other than income taxes 146 — 285 38 2 59 — 530

Interest and debt expense — — — — — 619 — 619

Other segment items **

1 — 8 — ( 9 ) 14 — 14

Total Costs and Expenses 17,867 ( 14 ) 102,856 113,140 3,264 1,296 ( 77,346 ) 161,063

Income (loss) before income taxes $ 5,176 856 7,976 2,072 171 ( 1,612 ) — 14,639

* These significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

The total of the line items "Operating expenses" and "Selling, general and administrative expenses" is considered "Controllable costs" and is provided to the CODM.

** “Other segment items” for each reportable segment includes the following line items on our consolidated income statement:

“Accretion on discounted liabilities” and “Foreign currency transaction (gains) losses.”

Millions of Dollars

As of and for the Year Ended December 31, 2022

Operating Segments

Midstream Chemicals Refining M&S Renewable Fuels Corporate and Other Total Consolidated

Interest Income $ — — — — — 82 82

Investments In and Advances to Affiliates 4,254 6,785 2,484 881 19 2 14,425

Total Assets 30,179 6,785 21,009 9,812 715 7,942 76,442

Capital Expenditures and Investments 737 — 607 87 323 134 1,888

Midstream $ 625 1,043 733

Chemicals — — —

Refining 1,339 928 784

Marketing and Specialties 364 89 202

Corporate and Other 90 134 141

Consolidated capital expenditures and investments $ 2,418 2,194 1,860

Geographic Information

7 unchanged sentences

Worldwide consolidated $ 49,642 51,014 50,113

Note 29— DCP Midstream Class A Segment

DCP Midstream Class A Segment is a VIE and we are the primary beneficiary.

DCP Midstream Class A Segment is comprised of the businesses, activities, assets and liabilities of DCP LP and its subsidiaries and its general partner entities.

Refer to Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers and Note 4—Business Combinations, for more details regarding the DCP Midstream Merger and related accounting.

DCP LP is a master limited partnership whose operations currently include producing and fractionating NGL, gathering, compressing, treating and processing natural gas;

recovering condensate;

and transporting, trading, marketing and storing natural gas and NGL.

As a result of the DCP Midstream Merger, we began consolidating DCP Midstream Class A Segment from the merger date forward, and we reflected the interests held by DCP LP’s public common and preferred unitholders’ and Enbridge’s indirect economic interest in DCP LP at the time of the merger as noncontrolling interests in our consolidated financial statements.

The DCP LP Merger increased our aggregate direct and indirect economic interest in DCP LP from 43.3 % to 86.8 %.

See below and Note 3—DCP Midstream, LLC and DCP Midstream, LP Mergers, for additional information about the DCP Midstream and DCP LP Mergers, as well as information on preferred unit redemptions that also decreased the “Noncontrolling interests” balance on our consolidated balance sheet since December 31, 2022.

Index to Financial Statements

Millions of Dollars

December 31, 2023 December 31, 2022

Accounts receivable, trade* $ 601 988

Net properties, plants and equipment 9,319 9,297

Investments in unconsolidated affiliates** 1,901 2,161

Accounts payable 815 1,239

Short-term debt 357 504

Long-term debt 3,759 4,248

* Included in the “Accounts and notes receivable” line item on the Phillips 66 consolidated balance sheet.

** Included in the “Investments and long-term receivables” line item on the Phillips 66 consolidated balance sheet.

DCP LP Merger

On June 15, 2023, we completed the acquisition of approximately 91 million publicly held common units of DCP LP pursuant to the terms of the DCP LP Merger Agreement.

We paid $ 3,796 million in cash consideration to common unitholders, funded with a combination of available cash and proceeds from the offering of the Notes and borrowings under the Term Loan Agreement.

See Note 11—Debt, for additional information.

The DCP LP Merger was accounted for as an equity transaction and resulted in decreases to “Cash and cash equivalents” of $ 3,814 million, which includes cash consideration paid to common unitholders of $ 3,796 million plus fees paid of $ 18 million, “Noncontrolling interests” of $ 3,343 million, “Capital in excess of par” of $ 361 million and “Deferred income taxes” of $ 110 million on our consolidated balance sheet.

Preferred Units

On October 16, 2023, DCP LP redeemed its Series C preferred units at the aggregated liquidation preference of $ 110 million, which approximated the book value of the preferred units.

In June 2023, DCP LP redeemed its Series B preferred units at the aggregated liquidation preference of $ 161 million, which approximated the book value of the preferred units.

In December 2022, DCP LP redeemed its Series A preferred units with an aggregate liquidation preference of $ 500 million, which approximated the book value of the preferred units.

Trading and Reporting Status

DCP LP’s common units, Series B preferred units and Series C preferred units have been delisted and deregistered from the New York Stock Exchange.

In addition, DCP LP has suspended its reporting obligations to the Securities and Exchange Commission under Sections 13 and 15(d) of the Exchange Act.

Distributions

For the years ended December 31, 2023, and 2022, DCP LP made cash distributions of $ 125 million and $ 51 million, respectively, to common unitholders other than Phillips 66 and its subsidiaries, and $ 15 million and $ 27 million, respectively, to preferred unitholders.

Index to Financial Statements

Note 30— Phillips 66 Partners LP

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Upon closing, Phillips 66 Partners became a wholly owned subsidiary of Phillips 66 and its common units are no longer publicly traded.

The merger was accounted for as an equity transaction and resulted in decreases to “Treasury stock” of $ 3,380 million, “Noncontrolling interests” of $ 2,163 million, “Capital in excess of par” of $ 901 million, “Deferred income taxes” of $ 323 million, and “Cash and cash equivalents” of $ 2 million, and an increase to “Other accruals” of $ 5 million on our consolidated balance sheet.

Note 31— Restructuring

In April 2022, we announced that we are progressing a multi-year business transformation focused on enterprise-wide opportunities to improve our cost structure.

For the years ended December 31, 2023, and 2022, we recorded restructuring costs totaling $ 177 million and $ 160 million, respectively, primarily related to consulting fees and severance costs.

Restructuring costs for the year ended December 31, 2022, also included an impairment related to assets held for sale.

These costs are primarily recorded in the “Selling, general and administrative expenses” line item on our consolidated statement of income and are reported in our Midstream segment.

The merger was accounted for as an equity transaction.

Note 31— New Accounting Standards

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40),” which will require additional disclosure of certain costs and expenses within the notes to the consolidated financial statements.

This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

We are evaluating the provisions of ASU 2024-03 and the incremental disclosures that will be required in our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures,” which enhances the transparency, effectiveness, and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid.

This ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are evaluating the provisions of ASU 2023-09 and the impact on our financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are evaluating the provisions of ASU 2023-07 and the impact on our segment reporting disclosures.

In March 2023, the FASB issued ASU 2023-01, “Leases (Topic 842):

Common Control Arrangements.” This ASU provides additional requirements for lessees that are a party to a lease between entities under common control in which there are leasehold improvements.

This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted.

Effective January 1, 2024, we adopted ASU 2023-01.

At the time of adoption, there was no impact on our consolidated financial statements from this ASU.

Index to Financial Statements

Upon adoption, the provisions of ASU 2023-09 will require additional disclosures within Note 24—Income Taxes, and Note 26—Cash Flow Information.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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What changed 10-K

Item 8. Financial Statements and Supplementary Data